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Encore: CEOs are split over the likelihood of a recession in the U.S.

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If the Federal Reserves moves too aggressively to combat inflation, there are fears it could trigger a recession. (Story first aired on Weekend Edition Sunday on June 12, 2022.)

Top CEOs in the U.S. are split over the likelihood of a recession

A MARTINEZ, HOST:

The Federal Reserve meets once again this week, and is likely to raise interest rates for the fourth time this year. It's part of aggressive actions to fight high inflation. But will the Fed's moves be too aggressive and tip the economy into recession? As NPR's David Gura reports, some of America's top CEOs say yes, but not all of them.

DAVID GURA, BYLINE: In the world of business, Jamie Dimon has a lot of clout. He's the CEO of JPMorgan Chase, one of the largest banks in the world. And that gives him unique insight. So it caused a stir when Dimon said recently the U.S. economy is about to get hit by a hurricane.

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JAMIE DIMON: That hurricane is right out there, down the road, coming our way. We just don't know if it's a minor one or Superstorm Sandy or Andrew or something like that. And you better brace yourself.

GURA: Elon Musk, the CEO of Tesla, is also worried. He's announced plans to reduce the number of salaried workers at the carmaker by 10%.

Predictions by chief executives carry a lot of weight. They're trying to figure out what the future holds for their businesses. And right now, a growing number of them worry this period of high inflation and higher interest rates could have disastrous consequences. The CEO of Wells Fargo, Charles Scharf, told The Wall Street Journal there's no question there's going to be a downturn.

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CHARLES SCHARF: I think it's going to be hard to avoid, you know, some kind of recession, just given the magnitude of the slowing that has to take place.

GURA: What makes forecasting so tricky right now is how much the U.S. economy has going for it. Yes, inflation remains a big problem, but people are spending freely on travel and dinners out. And most importantly, the unemployment rate is at 3.6%, near the pre-pandemic low. That's something Fed policymakers point to when they argue they'll be able to do a very delicate dance that won't end in a deep downturn.

Bank of America CEO Brian Moynihan addressed this last month during an interview in Davos, Switzerland.

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BRIAN MOYNIHAN: The question is, can they slow it down without tipping it over? And that's what the debate's about. People who get up in the morning on one side of the bed say it's going to tip over. People on the other side of the bed say we'll be fine. Our team believes we'll grow this year and next year.

GURA: Airline CEOs are also optimistic. They're seeing strong ticket sales, even with higher prices as the cost of fuel continues to go up. The CEO of Uber also doesn't seem worried. Dara Khosrowshahi told Bloomberg News he's not seeing warning signs in the company's data.

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DARA KHOSROWSHAHI: You know, we get a pretty live pulse of what's happening on the streets every day - right? - and in the cities in which we live. And at this point, we don't see any signal of a recession coming.

GURA: Cisco CEO Chuck Robbins told CNBC his clients are not slowing down or ordering less. And he argues all this talk about a recession could be dangerously self-fulfilling.

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CHUCK ROBBINS: In general, I think there's a wait-and-see attitude. And, you know, I have this fear that we talk so much about recession, we may actually create one on our own.

GURA: It may lead CEOs to cut back on spending preemptively, Robbins said, or cut staff. And people could scale back on their spending. That could lead to a downturn. Overall, a recent poll from the Conference Board shows most CEOs only see the risk of a mild recession, and most Wall Street economists don't expect one at all. In fact, JPMorgan's chief economist disagrees with his boss's hurricane forecast. He doesn't see a storm coming.

David Gura, NPR News, New York.

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