PwC Reports Business Leaders Prepare for Recession with an Eye Toward Growth

Executives are navigating significant economic uncertainty with confidence in their ability to survive – and thrive

With rising concerns about the economy, executives remain laser-focused on – and confident in their ability to drive – growth, according to the latest PwC Pulse Survey: Cautious to confident. Four out of five executives (81%) agree that there will be a recession in the next six months, noting concerns about high inflation, including declining consumer purchasing power and the higher cost of capital, and the Federal Reserve's aggressive tightening. This is a marked increase from August, when 60% of executives said a recession was likely in the next 12 months. Despite this, 82% of business leaders remain confident about their ability to execute on transformation initiatives and 77% are confident that they can achieve near-term growth goals (see Table 1 below).

“Executives continue to stare-down a complex, multi-challenge business climate, from a global pandemic to culture wars to new workforce challenges and everything in-between…all at a grueling pace,” said Kathryn Kaminsky, vice chair – US Trust Solutions co-leader, PwC. “Leading through turbulent times has become an all too familiar position, but it’s one where they now lead with experience and greater confidence than before. This is their new reality, and they’re more attuned to the levers they can pull to limit risk and better position for growth and success.”

Almost half (47%) are making changes to strategic planning. And while many executives reported implementing cost cutting efforts as they prepare for an expected recession, they are also making investments and considering their future portfolios: 44% are hiring in specific areas to drive growth, and 35% are planning an acquisition or divestiture, a 10-percentage point increase since August 2021. Three in four (76%) are confident in their company’s ability to free up working capital, while 77% are confident that their organization’s change initiatives will deliver expected results.

“Leaders are focused on growth and looking to enter a possible recession healthy and exit healthier,” said Neil Dhar, vice chair – Consulting Solutions co-leader, PwC US. “While they are conscious of their cost structure, it’s part of a bigger conversation about how they will transform their businesses for the future rather than a knee-jerk reaction to current economic conditions. How well and how quickly they are able to execute on these transformations will determine who comes out ahead.”

While economic factors are the top concern for business leaders (with 56% very concerned and additional 34% concerned), executives continue to have other issues on their radar. Worries about cyber-attacks continue, with 52% of executives noting that they are very concerned. This confirms our finding from August, when cyber was the No. 1 business risk, with 40% citing it as a serious risk. Executives are also very concerned about the active legislative environment (43%) and increased US political polarization (43%).

Navigating workforce considerations also continue to be top of mind for executives across the C-suite. Not only are they rethinking the makeup of their workforce to deliver on their cost and growth agendas, but they also continue to evolve how they hire, engage and manage their workforce in light of fundamental shifts to ways of working. A significant majority of Chief Human Resources Officers (CHROs) (81%) indicate that they are implementing at least one tactic to reduce their workforce to a great extent. In addition to layoffs, these include voluntary retirement, making performance-based cuts, not replacing people who leave and hiring freezes. 

“CHROs have been handed a complex challenge – manage costs and navigate the challenges of hybrid work, while also continuing to bring in very specialized skills, particularly in technology, to drive their growth agendas,” said Julia Lamm, Global Workforce Strategy Leader, PwC. “In the meantime, employee expectations have shifted and they are demanding more flexibility, better culture and different ways of working. CHROs are the ones developing talent strategies that are more personalized and tech-enabled with the goal of attracting and retaining the talent they need to grow.”

Companies continue to balance leadership and employee expectations around remote vs. on-site work. Nearly two-thirds (64%) of leaders agree that their company needs as many people back on-site as possible, up from 59% who agreed in August 2021 (see Table 2). While the on-site picture varies across industry and geography, 67% of executives are concerned that the move back to on-site is happening more slowly than expected. Companies are taking a variety of approaches to encourage people, including making improvements to workspaces to improve productivity and focusing on connectivity.

For more information and to view the full report, visit: https://www.pwc.com/us/growththroughrecession

About the survey PwC Pulse Survey: Cautious to confident

Between October 12 and October 18, 2022, PwC surveyed 657 US executives, including CFOs and finance leaders (14%), CHROs and human capital leaders (14%), CMOs (11%), tax leaders (14%), risk management leaders, including CROs, CAEs and CISOs (11%), COOs and operations leaders (12%), CIOs, CTOs and technology leaders (13%) and corporate board directors (11%). Respondents were from public and private companies in six sectors: industrial products (28%), consumer markets (23%), financial services (20%), technology, media and telecom (15%), health industries (10%) and energy and utilities (4%). The Pulse Survey is conducted on a periodic basis to track the changing sentiment and priorities of business executives.

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