Dow headed back below 30,000, slim chance of soft landing for economy in 2023: CNBC CFO survey

Every clip the banal marketplace has rallied disconnected a debased successful 2022, it's headed close backmost down again. High hopes among investors that the worst is successful person turned into caput fakes amid the highest involvement rates successful 15 years. The existent slump for stocks ending the twelvemonth is conscionable the past example, and the selling isn't implicit yet.

The latest harm to the Dow Jones Industrial Average volition get worse earlier it gets better, and adjacent arsenic the Fed's conflict with ostentation is starring to success, it volition travel astatine the terms of a hard landing for the system adjacent year, according to a caller survey of main fiscal officers conducted by CNBC.

The results of the latest quarterly survey of CFOs are not a surprise. Throughout 2022, conversations with idiosyncratic CFO Council members person much often than not tended to the presumption that the system is headed for a hard landing. At the caller yearly acme successful Washington, D.C. connected Nov. 30, polling successful the country showed that the bulk of CFOs remained of this view.

The CNBC CFO Council Q4 2022 survey is simply a illustration of the existent outlook among apical fiscal officers. It was conducted among 23 main fiscal officers astatine large organizations betwixt Nov. 30 and Dec. 20.

Here are a fewer of the details.

Recession is coming

It's been remarked that nary recession has been much predicted than the 1 that inactive hasn't deed the economy. Include CFOs successful this campy of prognosticators. More than 80% of respondents to the Q4 survey expect a recession successful 2023. That percent has accrued 4th implicit 4th arsenic much CFOs pushed backmost earlier forecasts that the system already had entered a recession. CFOs are divided connected the timing, with adjacent percentages (43%) saying the recession volition deed successful the archetypal fractional oregon 2nd fractional of the year.

Whenever a recession hits, the timing is little important than the survey uncovering that little than 10% of CFOs deliberation a brushed landing — the thought that the Federal Reserve tin chill economical conditions, bring down ostentation and bring up unemployment without sinking the system — is possible.

More Dow selling

CFO views connected recession connote much symptom for a banal marketplace that is ending the twelvemonth with different volatile crook down successful value. More than fractional of CFOs (56%) polled expect the Dow Jones Industrial Average to autumn backmost beneath 30,000 again earlier it ever reaches 40,000 for the archetypal time, and that's adjacent to triple the fig of CFOs (21%) who deliberation the worst is successful for the marketplace oregon chose not to marque a telephone connected stocks successful the survey. 

But the outlook isn't each gloomy. In a fewer cardinal areas for the system and markets, CFOs bash deliberation the worst is in. For example, with inflation.

Inflation has peaked

While it remains the apical outer hazard origin cited by CFOs — and cited by much CFOs successful Q4 — astir two-thirds of respondents present accidental ostentation has peaked. And CFOs bash judge that contempt the outgo to the system and banal market, the Fed is doing a amended job. More than fractional of CFOs present complaint the Fed's handling of ostentation arsenic "good" oregon "excellent," a large improvement. CFOs who described the Fed's efforts to power ostentation arsenic mediocre dropped from astir one-quarter of respondents successful Q3 to nether 10% who clasp this presumption now. 

Political risks won't vessel the marketplace

One crushed wherefore ostentation was cited by much CFOs arsenic the biggest outer hazard origin their businesses face: different hazard went down 10% 4th implicit quarter, the hazard of over-regulation. The midterm elections and divided authorities whitethorn beryllium liable for this diminished fear. 

On different cardinal governmental risks connected the skyline successful 2023, CFOs judge the headlines volition beryllium worse than the reality. A immense bulk of CFOs (over 80%) accidental a authorities shutdown is improbable successful 2023, and they besides deliberation that it is improbable – much than fractional accidental it's "very unlikely" – that Congress would neglect to rise the indebtedness ceiling, a presumption held by implicit 90% of respondents. That mirrors the presumption offered by Kevin Brady, the outgoing apical Republican connected the House Ways and Means committee, who told main fiscal officers astatine the caller CNBC CFO Council Annual Summit successful Washington, D.C., that it was "economic fear-mongering."

"The bottommost enactment is our indebtedness volition beryllium paid connected time. …  I don't expect a 2011 oregon adjacent 2018," Brady said.

Companies volition inactive walk and hire

As the economical concern and banal marketplace weakened this year, 1 acceptable of findings that has been accordant successful the CFO survey is comparatively unchangeable spending and concern plans. This remains the lawsuit successful Q4.

Less than one-quarter of CFOs expect their company's spending and headcount to beryllium reduced successful 2023. That's not to accidental companies aren't being much cautious. An adjacent percent (roughly 40%) of CFOs accidental their spending and headcount volition stay the aforesaid adjacent twelvemonth arsenic those who expect it to increase.