No Recession In 2019 Says North American CFOs, Europe More Worrisome

We can dismiss a recession this year, according to the chief financial officers (CFOs) in some of the largest corporations in the United States and Canada. A recession in 2020 is another matter, however.

The the first quarter “2019 CNBC CFO Survey” conducted by the CNBC Global CFO Council revealed that not a single CFO from North America believes there will be a recession this year. The survey showed that while CFOs and other C-suites remain unperturbed, they remain concerned about economics problems at home and abroad.

The news for the U.S. economy isn’t all that great, however. CFOs downgraded their view of the U.S. economy from “improving” to “stable.” This loss in confidence is better than the CFO’s view of China and the United Kingdom, which were both downgraded from “stable” to “declining.”

The survey also shows confidence in the U.S. economy is strong among CFOs worldwide. No CFO surveyed from the Asia-Pacific thinks the U.S. will experience a recession in 2020, and only a few CFOs from the Europe, Middle East and Africa region think a recession will occur. The outlook is more pessimistic among Eurozone CFOs.

Fewer than half of North America-based CFOs are confident there won’t be a recession in The European Union (EU). More than a fifth of CFOs from each of the North America, EMEA and Asia-Pacific regions think there will be a recession in the EU this year.

Members of the CNBC Global CFO Council consist of some of the largest public and private companies in the world. These firms combined have nearly $5 trillion in market value across a wide range of sectors. The first quarter 2019 survey was conducted between Feb. 7 and Feb. 22 and involved 54 members of the Council.

A cause for concern is that CFOs remain less convinced about the strength of the renewed U.S. stock market rally. More CFOs continue to believe the renewed rally in stocks won’t last.

The survey said 41 percent believe the Dow will more likely sink to 22,000 than exceed 27,000 (33 percent). The Dow stood at just under 26,000 at the close on Feb. 28. Wall Street finished its second-straight month of positive trading to start the year out right.

North America-based CFOs also expect the momentum from the 2017 tax cuts will continue to weaken. Only 35 percent said the tax cuts will continue to have a positive impact on U.S. companies.

Not a single CFO expects the U.S. Federal Reserve to cut interest rates in 2019. A small 17 percent think the Fed will raise rates as many as two times this year.