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It’s not just Cardi B. The CEOs of some of the nation’s top companies are also deeply concerned about the economy.
Warnings of an imminent recession — from Tesla CEO Elon Musk and JPMorgan Chase CEO Jamie Dimon, among others — reflect the deep uncertainty being felt in the country’s leadership ranks as inflation hits its highest annual rate in over 40 years .
The Federal Reserve begins its two-day meeting on Tuesday. Most analysts had expected the central bank to hike interest rates by half a percentage point for the second straight month, but a stronger-than-expected inflation report last week led markets to believe an even bigger move could be on the way.
And the central bank will almost certainly continue to hike rates quite aggressively in the coming months as inflation continues to soar.
The Fed is in the middle of a tricky dance that could end in major economic pain.
The central bank hopes to slow the US economy just enough to curb inflation without triggering a major economic slowdown.
But that’s often easier said than done. As the cost of borrowing rises for everything from mortgages to bank loans, businesses could respond by cutting costs or staffing, while people could start cutting back on spending.
Dimon, who runs one of the world’s largest banks, said he sees an economic “hurricane” on the horizon.
“Everybody thinks the Fed can handle it,” he said at a recent investment conference.
“This hurricane is out there, down the road, coming toward us. We just don’t know if it’s a smaller one or Superstorm Sandy or Andrew or something. And you better get ready.”
Musk is also worried.
He announced plans to cut Tesla’s workforce by 10% after reportedly saying in an internal email this month that he had a “super bad feeling” about the economy.
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Even Cardi B is concerned
Musk and Dimon aren’t the only CEOs concerned.
Charles Scharf, CEO of Wells Fargo, says there is “no question” that the US economy is headed for a downturn.
“I think it’s going to be difficult to avoid some kind of recession just given the scale of the slowdown that has to happen,” he told a conference last month.
And it’s not just CEOs.
Rapper Cardi B made waves this month by seemingly voicing her own concerns about the economy in a tweet.
“When do you think they’ll announce we’re going into a recession?” the artist tweeted.
When do you think they’ll announce we’re going into a recession?
— Cardi B (@iamcardib) June 5, 2022
But not all CEOs are worried
Not all CEOs are so pessimistic.
Although inflation remains a major problem, Americans are still spending money on vacations and eating out, and the job market is strong.
The unemployment rate has fallen to 3.6% according to the latest available government data, roughly where it was before the pandemic began.
A survey of business economists last month found that only about one in four economists expects a recession within the next year, although that was ahead of the latest inflation report, which showed stronger-than-expected gains in prices.
Airline executives say demand for travel has been strong, they’re finding it hard to keep up and they’re optimistic about the future even as fuel costs skyrocket due to higher energy prices.
“You know, we’ve been in this long, dark tunnel, going through COVID,” United Airlines CEO Scott Kirby said in a television interview last month. “We’re out of the tunnel. You know, even if fuel prices go up $10 billion year over year, we’re going to be close to 2019 profitability levels.”
Uber CEO Dara Khosrowshahi is also in the half-full glass warehouse.
“You know, we get quite a live pulse every day of what’s happening on the streets, in the cities we live in,” Khosrowshahi told a conference this month. “At this point in time we see no sign of a coming recession.”
But views could change if investors and consumers are spooked.
On Monday, the S&P 500 entered a bear market when an index plunged more than 20% from its recent high on inflation fears. United shares fell 10% while Uber shares lost 9%.
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All this recession talk
All the recession talk is worrying some top executives.
Cisco CEO Chuck Robbins said he was concerned that talk of a recession could become self-fulfilling.
“You know, I have this idea that we’re talking about a recession so much that we might even create one ourselves,” Robbins told CNBC in late May.
Finally, fears of a recession could lead CEOs to pre-emptively down-hire or even downsize, while people might respond with spending cuts.
President Biden and his administration are doing their best to signal more confidence in the economy as they try to address growing concerns.
Treasury Secretary Janet Yellen herself heard about Cardi B’s recent tweet.
“I don’t have that much time for her, but I’m alive,” Yellen said when asked at a conference if she knew who Cardi B is.
Then, more seriously, Yellen downplayed concerns about the economy, touting strong consumer spending among some of the positive trends.
“We have a very strong economy,” Yellen said. “I know people are right to be very upset about inflation, but there’s nothing to suggest a recession is in the works.”