Corporate America Showing Some Insecurity About Economy

Citing economic unknowns, some chief executive officers have limited guidance to investors on future results, fueling the stock market’s recent turbulence, according to Politico.

Increasing inflation, housing market instability, the future of damaged supply chains, and the worry about pandemic recovery are undefined factors that have led CEOs to urge caution. Such pessimism in earnings reports, private conversations, and public conference calls could lead to declines in spending and hiring, the website reported.

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“Senior management is out there just as clueless as we are as to which way things are going to go,” said Jack Ablin, Founding Partner at investment firm Cresset Asset Management.

The path that interest rates will take amidst continued inflation is a complete unknown. “Look, no one knows,” JPMorgan Chase CEO Jamie Dimon said on the bank’s recent earnings call. He also cited a best case scenario. “The consumer has money. They pay down credit card debt. Confidence isn’t high, but the fact that they have money, they’re spending their money.”

As pandemic stimulus funds have shrunk, however, some of that spending has dwindled, with retail sales slowing, rising only modestly in March as prices for gas and food ate up a larger share of consumers’ paychecks.

Polling data from Ipsos suggests that consumers are less confident about purchases and investments than they were two weeks ago. Most people polled expect inflation, mortgage payments, monthly expenses, and taxes to continue to rise. Affluent Americans with a household income above $100,000 showed the biggest drop in confidence.

These figures follow a resurgence in consumer confidence in early April, according to Ipsos.