Investors, Big-Company CEOs Split on Economic Optimism, Survey Says

By contrast, among both midsize company CEOs and large investors, two-thirds or more expect improvement in the same areas over the next six months, the survey found.

The challenge is the breadth of problems that big-company executives face, said

Ursula Burns,

Teneo’s chairwoman who sits on boards including

ExxonMobil Corp.

and

Uber Technologies Inc.

and previously headed

Xerox Corp.

“There are so many threads, it’s harder now than ever before,” Ms. Burns said. “That’s one of the most unique things about this time—nothing is really quiet.”

CEOs of the biggest companies are more likely than smaller competitors to have large international operations at a time when many see deglobalization under way, China’s role in growth is ambiguous and investors have higher expectations around environmental, social and corporate-governance issues, Ms. Burns added.

Investors, on the other hand, may be eyeing depressed valuations—bargains, for those buying—and looking through the turbulence, said Teneo CEO

Paul Keary.

“There’s a sense that the bad news is priced in,” he said.

Overall, CEOs based in the U.S. are significantly more bullish, with about three-quarters expecting improvement over the next six months, fueled by the relative optimism among chief executives of midsize firms. Meanwhile majorities in Europe and Asia expect conditions to worsen, the survey found.

Industries with more optimistic CEOs globally include financial and professional services, technology and consumer goods, Teneo found. CEOs in manufacturing and energy were more likely to be pessimistic.

Executives are addressing the potential impact of a recession in quarterly earnings calls.

Costco Wholesale Corp.

, approaching the point it might ordinarily raise its membership fees, could decide to hold off instead, CFO

Richard Galanti

told analysts Dec. 8. “With the headline being recession, question mark, and inflation, exclamation point, there’s no rush,” he added.

Teneo’s findings echo a range of mixed economic data and surveys in recent months. Measures of global consumer confidence are mixed, with one U.S. survey at levels near those of the 2008-2009 financial crisis, and another showing declines but roughly average levels overall, according to analysts at consulting firm Oxford Economics. In the United Kingdom and Germany, consumer confidence is at record lows.

Economists expect U.S. economic output to contract in the first half of 2023, according to the most recent Wall Street Journal survey. The surveyed economists put the chances of a recession over the next year at about 63%, up from 49% in July and the first time the probability has risen above 50% since July 2020. 

Teneo surveyed CEOs at about 130 public companies with annual revenue over $1 billion, roughly 40% of which had revenue over $10 billion a year, along with about 170 professional investors. Both groups were primarily U.S.-based.

Write to Theo Francis at [email protected]

By contrast, among both midsize company CEOs and large investors, two-thirds or more expect improvement in the same areas over the next six months, the survey found.

The challenge is the breadth of problems that big-company executives face, said

Ursula Burns,

Teneo’s chairwoman who sits on boards including

ExxonMobil Corp.

and

Uber Technologies Inc.

and previously headed

Xerox Corp.

“There are so many threads, it’s harder now than ever before,” Ms. Burns said. “That’s one of the most unique things about this time—nothing is really quiet.”

CEOs of the biggest companies are more likely than smaller competitors to have large international operations at a time when many see deglobalization under way, China’s role in growth is ambiguous and investors have higher expectations around environmental, social and corporate-governance issues, Ms. Burns added.

Investors, on the other hand, may be eyeing depressed valuations—bargains, for those buying—and looking through the turbulence, said Teneo CEO

Paul Keary.

“There’s a sense that the bad news is priced in,” he said.

Overall, CEOs based in the U.S. are significantly more bullish, with about three-quarters expecting improvement over the next six months, fueled by the relative optimism among chief executives of midsize firms. Meanwhile majorities in Europe and Asia expect conditions to worsen, the survey found.

Industries with more optimistic CEOs globally include financial and professional services, technology and consumer goods, Teneo found. CEOs in manufacturing and energy were more likely to be pessimistic.

Executives are addressing the potential impact of a recession in quarterly earnings calls.

Costco Wholesale Corp.

, approaching the point it might ordinarily raise its membership fees, could decide to hold off instead, CFO

Richard Galanti

told analysts Dec. 8. “With the headline being recession, question mark, and inflation, exclamation point, there’s no rush,” he added.

Teneo’s findings echo a range of mixed economic data and surveys in recent months. Measures of global consumer confidence are mixed, with one U.S. survey at levels near those of the 2008-2009 financial crisis, and another showing declines but roughly average levels overall, according to analysts at consulting firm Oxford Economics. In the United Kingdom and Germany, consumer confidence is at record lows.

Economists expect U.S. economic output to contract in the first half of 2023, according to the most recent Wall Street Journal survey. The surveyed economists put the chances of a recession over the next year at about 63%, up from 49% in July and the first time the probability has risen above 50% since July 2020. 

Teneo surveyed CEOs at about 130 public companies with annual revenue over $1 billion, roughly 40% of which had revenue over $10 billion a year, along with about 170 professional investors. Both groups were primarily U.S.-based.

Write to Theo Francis at [email protected]