Corporate executives are looking dimly at their prospects, and most are now looking forward to a recession ahead, according to a closely monitored business poll released Wednesday.

The CEO’s opinion of the Conference Board showed that 57% of respondents expect inflation to decline “over the next few years”, but the economy will remain in a “very short, mild recession”.

These results reflect an overall pessimistic tone on a quarterly scale as the Board of Directors ’confidence measure fell to 42, down sharply from 57 in the first quarter and to its lowest level since the early days of the Covid pandemic. Anything below 50 means a negative outlook because the figure measures the level of respondents expecting an expansion compared to those who see a reduction.

Such a reading “clearly corresponds to the slowdown,” said Roger Ferguson, vice chairman of the business council and trustee of the conference council, in an interview with CNBC’s “Squawk Box” after the report.

“All this tells us that the combination of inflation is too high to quote [Federal Reserve Chairman] Jay Powell, wages that are rising but not keeping up with inflation, and then the inability to transfer all this creates a very, very complex dynamic, ”said Ferguson, a former Fed deputy chairman.

The anticipation of a recession was not the only bad news from the report.

Only 14% of executives reported that business conditions improved in the second quarter compared to 34% in the first quarter. Sixty-one percent said conditions were worse, compared to 35% in the previous reading. Only 19% see an improvement ahead, compared to 50%, while 60% expect a deterioration from 23%.

One of the good news was that 63% expect to hire next quarter, which is just under 66% in the first quarter. However, about 80% said they had problems getting skilled workers, which has fallen slightly, while 91% see wages rise by more than 3% next year, compared to 85% in the first three months of the year.

In addition, only 38% expect an increase in capital expenditures, which has fallen sharply from 48% previously. About 20% see stagflationary conditions of low growth and high inflation.

Powell said in an interview with The Wall Street Journal on Tuesday that he remains determined to quell inflation, insisting he will need to see changes in conditions “clearly and convincingly” before the Fed stops raising rates and tighten monetary policy.

Ferguson said the poll “suggests that this set of circumstances is unlikely to improve any time soon and as a result, pressure on the middle and bottom line for business, pressure on the household sector, pressure at the CEO level and, frankly, pressure on the Federal Reserve. ”

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