CEOs Fear Washington Instability Could Trigger 2020 Recession

Political uncertainty, ongoing tariffs and scarcity of talent are forcing CEOs to delay investments and play it safe—at least for now.

In a recent poll of 228 CEOs by Chief Executive, 68 percent say the outcome of the Presidential election next November is their top concern when planning for 2020, ahead of a Chinese trade resolution.

Surveyed CEOs say the uncertainty in Washington is making it difficult to forecast and plan ahead, which, in turn, is forcing them to continue to exercise caution in the deployment of cash. Adding to that rising costs of goods due to tariffs and the lack of qualified talent to support growth, and CEOs say they have no choice but to play it safe—at least until there is more clarity and stability.

“New bookings have slowed to a crawl; all seem to be waiting for 2020 or some relief from the Washington chaos,” says Denise McIntosh, CEO of global industrial manufacturer Custom Powder Systems, who says she doesn’t expect to increase her company’s capital expenditures in 2020. “We are not losing orders; people are just not releasing capital projects…We have seen these cycles before, but not to this extent. People seem to be frozen in time and won’t make buying decisions.”

Some say the current situation is not only delaying investments, but it is also endangering an otherwise stellar climate for business, and that if Washington doesn’t straighten up soon, the economy could take a severe downturn. Some are even putting the possibility of a recession back on the table.

“Widely varying signals from the U.S. Administration on approach to trade and tariffs [are] crippling business confidence and ability to plan,” says Tim Zimmerman, president and CEO of Mitchell Metal Products, who is among the 15 percent of surveyed CEOs forecasting declines in both revenues and profits over the coming year. “If there is not true clarity by the end of the first quarter of 2020, I believe the U.S. economy will be in a recession by the end of the third quarter of 2020. U.S. manufacturing is very near, if not already, in recession,” he says, adding that he expects this weakness to spread throughout the rest of the U.S. economy, including consumer spending.

“It’s a bubble—just a question of when it bursts, and it’s hard to see it lasting through 2020,” says John Dillworth, president and CEO of Goodwill Industries of Southwestern Michigan, who plans to decrease capital expenditures by more than 20 percent in 2020. “Uncertainty is the enemy of investment.”

And CEOs across most industries agree.


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