A recession is expected in North America by 2023, but are CFOs more afraid of recession or inflation in this country? A recession is a significant, widespread, and prolonged downturn in economic activity. Inflation is a rise in prices, which can be translated as the decline of purchasing power over time. Below you will learn what are CFOs biggest concerns for 2023. 

As reported by Wall Street Journal and Deloitte on September 12th, 2022 by Patricia Brown and Maureen Cashman

Inflation Fears Outweigh Recession Concerns for Surveyed CFOs

It’s getting rough out there. Many companies will likely trek through more difficult business terrain in the coming months, based on responses to Deloitte’s “CFO Signals” survey for the third quarter of 2022. Although fewer CFOs than in recent quarters express worries about the COVID-19 pandemic, they cite ongoing concerns over a host of talent issues, executing on strategies, managing inflation, costs, and their supply chain, geopolitics, policies and regulations, a potential recession, and interest rates.

Amid such adversity, CFOs’ views of current conditions in all five economic regions covered in the survey fell for the third quarter. For North America, 33% of CFOs rate the current economy as good or very good, a steep decline from 52% in the prior quarter. Just under three-quarters of CFOs (73%) say they are more concerned about persistent inflation than a recession in North America; the remaining 27% are more worried about a recession. Nearly half of survey respondents (46%) expect the economy to be in a recession by 2023, outnumbering those who expect the economy to hit a period of stagflation (39%) or to grow with moderate inflation (15%) by next year.

Sentiment was similarly gloomy about the current economies of Europe, China, and South America, with just 7% of CFOs viewing conditions as good or very good in each region—all representing a decline from the second quarter of 2022. The economy of Asia, excluding China, fares slightly better, with 17% of CFOs considering it good or very good.

“Deloitte’s third-quarter CFO Signals survey reveals that CFOs are grappling with the effects of inflation and the prospects of a potential recession,” says Steve Gallucci, national managing partner for the U.S. CFO Program of Deloitte LLP, and global leader for the CFO Program of Deloitte Touche Tohmatsu Limited. “Some organizations are already taking measures to cope with slowing growth, including cuts to hiring, wage growth, and capital spending. Nevertheless, sustained inflation remains a more worrying prospect for CFOs than a recession.”

Looking ahead, 29% of CFOs indicate conditions in North America will improve in a year, up from 18% in the prior quarter. That rise might help explain why the percentage of CFOs saying now is a good time for greater risk-taking inched up to 38% from 35% in the second quarter of 2022, although their appetite for risk-taking remains far below the two-year average of 52.8%.

The 62% of CFOs who say now is not a good time to be taking greater risks could be taking into account continuedalbeit declininginflation, major increases in interest rates, the ongoing impacts of the Russia-Ukraine war, other geopolitical issues such as China-Taiwan tensions, and fears of a possible recession.

Fewer CFOs this quarter find debt financing as attractive than they did in 2Q22: Just 16% indicate that debt financing is attractive, a sizable decline from 32% in the prior quarter. Meanwhile, the attractiveness of equity financing among CFOs has risen slightly, to 26% from 22% in the second quarter of 2022.

Company Prospects and Growth Expectations

CFOs’ views of their own companies’ financial prospects stayed negative for the second quarter in a row, with net optimism dropping to -18 from -11. Services, technology, and telecom/media/entertainment CFOs are the least pessimistic; healthcare/pharma, retail/wholesale, and manufacturing CFOs are the most pessimistic. Compared to the previous quarter, the percentage of CFOs expressing more optimism for their companies’ prospects tumbled to 19% from 27%, the lowest reading of that figure since the second quarter 2020 survey, when the pandemic was sweeping across the world.

For the second quarter in a row, CFOs lowered their year-over-year growth expectations for their own company’s revenue, earnings, and capital spending from the prior quarter. With ongoing talent issues related to recruitment and retention, low employee morale, and concerns with getting people back to the workplace, CFOs specifically cut their growth expectations for domestic wages/salaries and hiring—both at 5.3% last quarter—to 4.8% and 2.6%, respectively. This was the first noticeable decrease in that metric since the second-quarter 2020 survey.


Those CFOs expecting the North American economy to be in a recession by 2023 say they are preparing by reducing or closely managing operating expenses; controlling headcount, limiting hiring, and boosting productivity; conserving or strengthening liquidity; and reprioritizing or deferring capital expenditures. Other actions include modeling to test cash flows under different scenarios, managing pricing and contracts, reducing capital expenditures, and better managing customers and market share. In addition, several CFOs are evaluating their customers, services, and products to identify opportunities to help recession-proof their organizations.

What are you more concerned about for 2023? A recession or inflation?

Relevant Resources

Controllers Recession Management Playbook

Controllers Inflation Management Playbook

Inflation Sits at 8.2% as Core Prices Hit Four-Decade High (WSJ)