A majority of corporate executives now expect a recession, according to a survey released Wednesday.
The Conference Board measure of CEO sentiment shows that over the next few years, they expect inflation to come down, but the economy to sustain a mild recession.
The board's Measure of CEO Confidence fell to 42 from 57 in the first quarter, the lowest since the early days of the Covid pandemic. If the number is less than 50, it means that the respondents are expecting contraction and not expansion.
Roger Ferguson, vice chairman of the Business Council and a Trustee of The Conference Board, told CNBC that the reading was consistent with slowing.
The combination of inflation that is too high to quote Federal Reserve Chairman Jay Powell, wages that are increasing but not keeping up with inflation, and the inability to pass all this along is creating a very challenging dynamic.
The other bad news out of the report was the recession expectation reading.
In the first quarter, 34% of CEOs reported that business conditions had improved. In the previous reading, 34% said conditions were worse. Only 19% think things will get better, down from 50%, while 60% think things will get worse, up from 23%.
The good news is that only slightly more people expect to be hired in the next quarter. Some 80% said they were having problems getting qualified workers, down just slightly, while 91% said wages would rise over the next year, up from 85% in the first three months of the year.
Just 38% of people expect capital spending to increase. Some people think that there is low growth and high inflation.
In an interview with the Wall Street Journal, Powell said that he will need to see conditions change before the Fed stops raising rates.
According to the survey, the situation is not likely to get better anytime soon, and therefore pressures on the middle and bottom line for businesses, as well as pressure at the CEO level, and pressures on the Federal Reserve.
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