Recession remains a top concern for America’s business executives, another reason for fiscal restraint.

A new Conference Board survey confirms that America’s business leaders remain concerned about the potential for a near-term recession.

Recession fears top the list

  • Global: For the 2nd year in a row, CEOs and other C-Suite executives globally rank a recession as their top external worry in the year ahead.
  • US: For US CEOs, a recession rose from being their 3rd biggest concern in 2019 to their top one in 2020. The issue surpassed cybersecurity, their top concern in 2019.
  • Elsewhere: A recession also tops the list of concerns of Chinese and European CEOs, and ranks as the runner-up for Latin American and Japanese CEOs.

The Wall Street Journal reports,

U.S. chief executives are getting worried about a recession.

Fear of an economic decline topped the list of their concerns going into 2020, according to a survey from the Conference Board, a business research group. The year prior, recession fears ranked third for U.S. chiefs, though first overall for CEOs around the world—as is again the case for 2020. Going into 2018, the topic was barely a blip in the survey data.

Bloomberg News also has the story.

Corporate leaders around the world apparently have not gotten the memo yet that a recession isn’t happening anytime soon.

CEOs still consider the end to an expansion that has been the longest in U.S. history and has spread around the globe to be the biggest fear in 2020, according to the Conference Board’s CEO Challenge survey released Thursday.

At CNBC:

Economists have been warning about a likely slowdown, particularly in the U.S. where fiscal stimulus from the 2017 tax bill is expected to wear off. Still, the International Monetary Fund projects U.S. GDP to grow at a 1.9% rate in 2020, and global growth to clock in at 3.5%…

The survey did point to the tight labor market and expected upward pressure on wages to be boosts to growth, while loss of consumer confidence and a decrease in spending as downside risks.

This is something of a reversal in informed opinion. Earlier, we reported business economists believed the odds for a 2020 recession were low. The Federal Reserve Board last month also seemed to be less concerned with recession risk.

The Federal Reserve’s policymaking committee saw much less risk of recession at its meeting last month, when it kept interest rates steady after three straight cuts and signaled that it expected to keep low rates unchanged through this year…

At their meeting last month, Fed officials noted that the U.S. economy was “showing resilience” despite the trade fights and a weak global economy, the minutes said. A rise in long-term rates also “suggested that the likelihood of a recession occurring over the medium term had fallen noticeably in recent months.”

Since last month’s meeting, though, tensions have escalated in the Middle East as the United States has struck Iranian forces in Iraq.

Economic prediction is an inexact art, made even more challenging in an environment marked by uncertainty. As the WSJ reports, uncertainty remains high.

Last year, growth in gross domestic product globally slipped to 2.3% from 3% in 2018, and executives felt the pressure, said Bart van Ark, chief economist at the Conference Board. Uncertainty around a host of issues, from trade to climate change, has exacerbated their anxiety.

“Business leaders are like normal people. We just don’t quite understand where this all will be going,” Mr. van Ark said.

Which sounds like a good reason for state governments to be maintaining healthy reserves. That’s what the Seattle Times editorial board thinks. While generally welcoming Gov. Inslee’s emphasis on homelessness, the editorial warns against funding the initiative from reserves.

…the state should not dip into emergency reserves for new homeless spending as Inslee proposed…

Homelessness is not a one-time, unanticipated expense, justifying a drawdown of the rainy-day fund. It’s an ongoing social-services obligation. This is also a bad time to tap reserves, with state forecasters expecting the rate of economic growth to slow…

Legislators must also resist calls to use the rainy-day fund for the perpetual, high cost of reducing homelessness.

Tapping reserves for ongoing expenses is generally a flawed fiscal policy. Doing so with recession risks rising makes it even more troubling.