Corporate economists express growing pessimism in business survey

The National Association for Business Economics is out this morning with its latest report on business conditions for the second quarter. The group surveys corporate economists on their company’s current situation and future outlook, and for the U.S. economy as a whole. 

With the Fed aggressively hiking interest rates to fight inflation, and the economy slowing as a result, this survey is flashing “warning signs ahead.”

Key business indicators took a turn for the worse in the National Association for Business Economics’ July survey — from sales and profit projections, to plans for capital investment. 

Bottom line: Corporate pessimism is on the rise, said NABE economic analyst Ken Simonson.

“There was quite a spike in the percentage of firms that expect the U.S. to enter a recession in the next year. Forty-three percent of respondents now think the odds are better than even.”

That’s up from just 13% back in April.

Economist Dan North at credit-insurer Allianz Trade North America predicts that with growth slowing, the strong U.S. labor market is now at risk. 

“Usually unemployment is a lagging indicator, because the last thing any business wants to do is fire people. So it’s not surprising unemployment looks good now. It won’t in a few months from now,” he said.

NABE’s survey indicates firms are curtailing future hiring plans.