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In a seeming contradiction, a full 81% of executives say they believe a recession will hit within the next six months, but a similar number – some 77% of leaders – are also confident they'll achieve near-term growth. These figures come from the third 2022 PwC Managing Business Risks Pulse Survey, which looked at more than 650 U.S. executives this October. Asking questions about the macroeconomic environment, leaders' fears, and financial planning, the survey paints a picture of what changes might be coming to the workforce in the coming year.
First, the survey finds that executives are confident in their own abilities to maintain success despite economic threats. In addition to the 77% of executives who are confident in their ability to achieve near-term growth, the survey finds that 82% of leaders are confident in their ability to execute on transformation initiatives, and more than three-quarters of executives say their companies can free up working capital as needed.
Still, the vast majority of executives are concerned about the economy. Inflation is one major concern; so are interest rates, which have been raised by the Fed in an effort to moderate inflation. In response to these fears, leaders have already started taking cost-cutting measures, with 26% of companies planning to cut some full-time employees and 42% planning other cost-reduction measures.
As the report points out, these actions can actually help trigger the type of recession that executives are concerned about.
For business leaders, the survey offers a few tips to prepare for a potential recession. They include:
- Assess your prices to ensure they're set at appropriate levels for customers and, if not, make strategic changes.
- Analyze the impact of multiple potential recession scenarios, including both short and long, and deep and shallow recessions.
- Be sure you're communicating well with your stakeholders throughout this volatile economic time.
- Invest in personnel and technology to help you maintain compliance.
- When recruiting employees, make sure you prioritize and offer flexibility as much as possible.
- Don't panic: the economic volatility and changes of the COVID-19 pandemic have developed skills in many leaders that can prepare them for even a major recession.
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