Inflation or Recession? CEOs Will Decide Next Month
Companies need to decide how they will deal with increasing pressure on profit margins — setting the direction for the economy.
What’s next?
Photographer: Spencer Platt/Getty Images North AmericaConsumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.
Categories that provided relief to companies’ bottom lines over the past year — freight and energy prices, key commodities such as lumber, and supply chains — have either normalized and are unlikely to provide further benefits, or are reversing and will start to squeeze profits again. Companies will inevitably act to protect their profit margins. Whether they respond by cutting costs or once again prioritizing price increases over unit sales will determine whether the bigger risk in the first half of 2024 is recession or inflation. Neither outcome will be good for stocks.