Wall Street Journal: CEOs Say Recession Is Top Worry for 2019

Article by Lauren Weber in Wall Street Journal

The possibility of a global recession ranks as the top concern on the minds of corporate leaders as they head into 2019, according to a new survey of chief executives from the Conference Board, a business research group.

That is a dramatic reversal from a year ago, when executives were sanguine about the risk of recession, ranking it their 19th concern overall out of 28 issues, below issues like outdated infrastructure, workforce diversity and income inequality.

The survey of more than 800 CEOs from around the world was conducted in the fall, before a sharp decline in stock prices amplified worries that economic growth is stalling.

Given that CEOs sensed the possibility of recession before the markets’ recent decline, much of their sentiment stems from other challenges that ranked high on their list of external concerns, said Bart van Ark, the Conference Board’s chief economist. After recession, the top four risks were threats to global trade systems, global political instability, new competitors and declining trust in political and policy institutions.

“There are worries that the policy environment is just not ready to deal with the economic challenges we’re facing,” Mr. van Ark said.

In a separate report on global risks, the World Economic Forum, which produces the annual Davos confab of politicians, business leaders and academics, on Wednesday identified trade wars and rising political tensions as the biggest global threats. Cyberattacks and climate change were also high on that list.

European CEOs named global political instability as their dominant worry.

If the Conference Board had surveyed CEOs in December, after the Dow Jones Industrial Average fell more than 10% from its October level, recession “would probably have been first in the U.S. and Europe too,” Mr. van Ark said.

Global trade ranked especially high for executives from the two countries at the center of the most contentious trade dispute, the U.S. and China. In China, CEOs ranked it their second-biggest external concern. In the U.S., it was fourth.

Those worries are starting to show up in corporate earnings and statements from chief executives. Earlier this month, Apple Inc. cut its quarterly revenue forecast for the first time in more than 15 years because of slowing sales in China, where growth is under pressure in part because of trade tensions with the U.S.

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