In business, as in life, good leaders hope for the best and plan for the worst. There’s a reason that experts refer to the regular expansion and contraction of the economy as the business cycle. Even producers of the most recession-proof products—toiletries, beer, funeral services—need to consider how rising and falling consumer sentiment will affect their bottom line.
Of course, timing the next downturn is easier said than done. So as we head into a new year, we reached out to the Fast Company Impact Council—a leadership group of 200 founders, executives, and creatives—to gauge how some of the smartest and most innovative people in business are thinking about a possible recession.
About 4 in 10 respondents told us they expect the global economy in 2020 to perform about the same. But remarkably, nearly 45% predicted that the next 12 months would be worse for business. Only 16% said that the global economy would be better.
Impact Council members were more like-minded about the timing of the next downturn. While 21% predicted a recession would hit in 2020, the majority (54%) said it would likely arrive in 2021, after the next presidential election. About 15% responded that the next recession would come in 2022. Only 1 in 10 said the economy would continue to grow until 2023 or later.
For now, the vast majority of the Fast Company Impact Council says they are confident about their organization’s prospects for growth in the new year. But expectations for an economic slowdown could have implications for how business leaders choose to invest in their companies in the coming year—especially for startups that prioritize growth over profitability. The collapse of WeWork, for example, has been a cautionary tale for some Impact Council members, 20% of whom said the office-rental startup’s financial and operational struggles had influenced their conversations with investors. A rising tide lifts all boats, but, as Warren Buffett famously quipped, it’s “when the tide goes out that you discover who’s been swimming naked.”
Overall, however, business leaders appear to be more optimistic than they were last summer. Back in August, when we last surveyed our Impact Council, about two-thirds of respondents told us the economy would be worse in the next 12 months. Since then, the stock market is up and unemployment is down—thanks in part to a Federal Reserve that shows no interest in pumping the brakes. Our turbocharged economy may be overdue for a correction, but it hasn’t run out of gas just yet.