Jerry Howard, CEO of the National Association of Home Builders, pointed out that the NAHB/Wells Fargo Housing Market Index has declined for eight consecutive months, as well as the fact that it has fallen below “neutral” levels, suggesting that it has that the mood “sinks”.
The vast majority of business leaders are preparing for — or believe the US economy is already in — a recession, a new poll shows.
Findings released by Stifel Financial show that 18% of corporate executives, business owners and private equity investors believe the economy has already contracted and is in recession. In comparison, about 79% of them expect a downturn within the next 18 months.
In comparison, only a small fraction of executives — around 3% — believe a recession can be avoided entirely.
“Given the uncertain backdrop, it is understandable that companies are planning for a possible prolonged downturn and are considering various economic scenarios and their approach to strategic planning over the next year,” said Michael Kollender, head of consumer, retail and diversified industrials investment banking at Stifel . “Market conditions and economic cycles often turn quickly.”
FED LIKELY TO CONTINUE RAPID RATE RISE DESPITE INFLATION RECOVERY PERIOD
A pedestrian walks past a used car dealership in Miami, Florida on January 12, 2022. (Chandan Khanna/AFP via Getty Images/Getty Images)
The study also revealed that companies see painfully high inflation and persistent labor shortages as the biggest threats to profitability.
More than half of respondents – 55% – expect inflation to remain a problem for the next two quarters to a year, while another 43% expect high prices to persist for longer.
New data released by the Labor Department last week showed consumer prices rose 8.5% in July, flat from the previous month. While this marked a significant slowdown from June, inflation remains near 40-year highs and continues to wreak financial pain on consumers and businesses.
There is a growing consensus on Wall Street that the Federal Reserve will trigger a recession as it fights inflation with a series of aggressive rate hikes. Policymakers approved the second straight 75 basis point rate hike in July and have indicated that another outsized rate hike is on the table in September depending on upcoming economic data.
Federal Reserve Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee in Washington, DC May 4, 2022. (Al Drago/Bloomberg via Getty Images/Getty Images)
Fed Chair Jerome Powell has said tackling inflation remains the central bank’s top priority, even if it means risking a downturn – although stressing he doesn’t believe the US is currently in a recession.
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“We think there is a need to slow growth,” he said in July. “We actually believe we need a period of sub-potential growth to create some slack for the supply side to catch up.”