Most of North America’s top finance executives overwhelmingly expect a U.S. downturn by the end of 2020, with a slowdown seen as much more likely than a recession, according to Deloitte's first-quarter 2019 CFO Signals survey.

Assessments of regional economies

CFOs' perceptions of North America declined, with 80 percent rating current conditions as good (down from 88 percent) and 28 percent expecting better conditions in a year (same as last quarter).

Perceptions of Europe declined, with 16 percent noting current conditions as good and only 8 percent expecting better conditions in a year; Their views of China's economy slid, with 20 percent indicating current conditions are good and 16 percent expecting better conditions in a year.

"This quarter, nearly three-fourths of respondents said they expect a deceleration of U.S. economic activity by the end of 2020, but only 15 percent expect an actual recession — meaning an extended decline in activity. While a slowdown is certainly better than a recession, CFOs' own-company optimism remains at one of its lowest levels in the last three years," said Sanford Cockrell III, US national managing partner and global leader, CFO Program, Deloitte LLP

Meanwhile, CFOs' expectations for growth in revenue, earnings, hiring and wages declined (only capital expenditure rose); all metrics sit below their two-year averages, the survey found.

Downturn planning

Nearly 85 percent of CFOs said they expect a U.S. downturn by the end of 2020, and they overwhelmingly expect a slowdown rather than a recession.

Those expecting a downturn were most likely to cite U.S. trade policy, business and credit cycles, and the impacts of slowing growth in China and Europe on the U.S. economy. 

A minority indicated they have detailed defensive or opportunistic plans; most CFOs expect to take defensive actions, including reducing discretionary spending and limiting or reducing headcount.

Diversity and inclusion (D&I) strategy

Meanwhile, companies are using a variety of programs to promote diversity and inclusion; flexible work arrangements are the most common.

"While two-thirds of CFOs said their organization has a formal D&I strategy, only 53 percent state that this is known throughout their company. This is an opportunity for organizations to not only develop a D&I strategy, but ensure that everyone in their organization is aware, engaged, and views it as a fundamental value in their culture," said Terri Cooper, national chief inclusion officer, Deloitte LLP.

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