Two-thirds of CFOs say the US will be hit by a recession within the next 12 months

A recent survey of chief financial officers found that most believe a recession will hit in the next 12 months and no one believes the US economy will escape a downturn.

The CNBC CFO Council survey A report released Thursday found that 68 percent of CFOs responding to the survey predicted a recession will occur in the first half of 2023.

No CFO predicted a recession later than the second half of next year, and no CFO surveyed thinks the economy will avoid a recession.

It is the latest warning sign that the US economy could be heading for a cliff after a period of explosive growth, as rising energy costs and Federal Reserve rate hikes weigh on expansion.

Traders can be seen on the NYSE earlier this month. Markets are nervous about the growth outlook as many experts now predict a recession in the next 12 months

The CNBC survey found that more than 40 percent of CFOs cite inflation as the top external risk to their company, and nearly a quarter cite Federal Reserve policy as the top risk factor.

In an effort to curb inflation, the Fed has raised its policy rate by 75 basis points since March and has begun to trim its $9 trillion balance sheet by selling bonds it bought during the COVID-19 pandemic.

The Fed is expected to raise overnight rates by half a percentage point at each of its forthcoming meetings this month and in July.

Just over half of the CFOs surveyed expressed confidence that the central bank will succeed in controlling inflation, but that did not change their view that the economy is heading for recession.

Warning signs for the US economy have been increasing in recent weeks, after gross domestic product unexpectedly contracted by 1.5 percent in the first quarter.

A second consecutive quarter of negative GDP growth would mean an official recession, but so far most economists still believe a downturn won’t hit until 2023.

The US economy contracted unexpectedly in the first quarter, falling 1.5 percent, partly due to a widening trade deficit

In April, consumer prices rose 8.3 percent year-on-year, just short of the fastest increase in four decades recorded a month earlier

Earlier this week, the World Bank cut its global growth forecast for 2022 by nearly a third, warning that the risk of 1970s-style ‘stagflation’ is rising and saying many countries are now facing a recession.

“The danger of stagflation is significant today,” World Bank President David Malpass wrote in the foreword to Tuesday’s report, which cut global growth forecasts for 2022 to 2.9 percent.

The International Monetary Fund also expects to further cut its forecast for global economic growth in 2022 next month, IMF spokesman Gerry Rice said Thursday.

That would be the third downgrade this year. In April, the IMF had already cut its forecast for global economic growth by almost a full percentage point to 3.6 percent in 2022 and 2023.

Rice told a regular IMF briefing that the overall outlook still calls for growth around the world, albeit at a slower level, but warned that a number of countries could face a recession.

Jaime Dimon, CEO of JPMorgan Chase, also issued a stark economic warning last week, saying rising commodity prices and tightening monetary policy could inflict a “hurricane” on the US economy.

Speaking at a banking conference in New York on Wednesday, Dimon warned the gathering of investors and analysts, “You better brace yourself.”

“I said there were storm clouds, big storm clouds, but it’s a hurricane,” the US banking giant said.

“Right now it’s kind of sunny, things are going well, everyone thinks the Fed can handle this. That hurricane is over there, on the road, heading our way. We just don’t know if it’s a small one or Super Storm Sandy,” he added.

“JPMorgan is bracing us and we’re going to be very conservative with our balance sheet,” he said.