Future Forum’s latest report, which surveyed more than 10,000 workers during August, found that overall work satisfaction scores dropped 15% for executives, who also reported work-life balance scores that were 20% worse and work-related stress and anxiety scores that were 40% higher....getty
For months, the pandemic has driven an upswing in burnout among workers, focused attention on employees’ mental health concerns and fueled a wave of departures known as the Great Resignation, most noticeably on the front lines.
But the latest quarterly survey released Thursday from Future Forum, a consortium backed by the messaging platform Slack, finds that now, even senior executives’ sentiments about their jobs are declining—and it appears to be prompting them to fall back on old norms about where and when people work.
Future Forum’s latest report, which surveyed more than 10,000 workers during August, found that overall work satisfaction scores dropped 15% for executives, who also reported work-life balance scores that were 20% worse and work-related stress and anxiety scores that were 40% higher. While the sentiment and experience scores for executives dropped precipitously—particularly among those who work for large companies—those for non-executives remained flat or rose slightly, the report said.
While that might elicit little pity from employees who’ve felt overworked and underpaid over the past two years—and who are also worried about the economic slowdown—the added economic stress for executives can have an impact on the people who work for them, says Slack’s Brian Elliott, the executive leader for Future Forum.
“On top of that set of changes and challenges [from the pandemic], you’re facing a lot of economic pressures too,” says Elliott. “That kind of stress is leading people to go back to what’s familiar and comfortable for them. Executives are saying things like ‘I need my finger on the pulse of the organization’”—otherwise known as monitoring people in the office. “This is the first time we’re seeing this kind of jump and increase in stress in executives.”
Elliott says that whenever he talks to senior leaders—Future Forum does research but also convenes executives to swap ideas—the issues of productivity and culture come up as concerns. But the new data suggests employees work more productively if they have flexibility—and that concerns about culture erosion may be overblown.
Future Forum’s report—released by Slack, which makes tools it hopes will serve as a “digital HQ” for hybrid workers—found that workers who have full flexibility with their schedules say they are 29% more productive and 53% more able to focus than those who have no schedule flexibility.
Meanwhile, remote and hybrid workers were 52% more likely to say company culture has improved over the past two years, compared with those who work onsite daily, even though 25% of executives said “team culture is negatively impacted” by not being together in the office.
“I get why the stress is there on executives, but it’s driving a set of behaviors that are actually contrary to what they want to accomplish,” Elliott says. The report, for instance, also found that 60% of executives surveyed said they are designing policies with little direct input from employees.
He says that could lead organizations to be less competitive when it comes to recruiting talented employees. “If, as a senior leadership team, you’re still basing most of your decisions on the discussions that are happening at this level and not really getting in and understanding it,” Elliott says, “then you’re at risk of going backwards.”
I am a Senior Editor at Forbes, leading our coverage of the workplace, careers and leadership issues. Before joining Forbes, I wrote for the Washington Post for more than a decade covering
As home sales tumble to the lowest level in years, a rash of industries tied to the housing market are starting to show signs of deterioration, with home builders, appliance makers and some retailers among those likely to take the biggest hit as experts worry the downturn could spark a broader recession.
In a Tuesday report, Bank of America noted the rate of wire payments to escrow and title companies—typically used to pay deposits for home sales—have fallen this year for the first time since the Covid recession in mid-2020, according to consumer spending data, adding to mounting signs of a housing market slowdown.
The impact has perhaps been felt most by home builders, who in August declared that the nation has fallen into a “housing recession” and have seen shares tumble more than 30% this year, according to the S&P Homebuilders Select Industry Index, which includes home-manufacturing giants such as Masco and Owens Corning; the broader S&P 500 has fallen 24%.
Bank of America notes the slowdown could also be a drag on consumer spending due to the impact on housing-related segments, most notably furniture spending, which has a “historically close” relationship with housing sales and has already fallen more than 10% year over year.
In past housing cycles, including the collapse that sparked the Great Recession more than a decade ago, furniture spending didn’t hit its low until a few months after home sales did, so Bank of America notes that further weakness could still lie ahead.
Others susceptible to the decline include appliance makers, in-home entertainment companies and consumer electronics firms including Best Buy, whose CEO last year pointed to the booming housing market as reason for better-than-expected sales on items like TVs and home theater setups.
Analysts aren’t yet convinced the housing-related fallout alone will trigger a recession, but the impact could be big: Harvard researchers have estimated the market’s effects have accounted for at least one quarter of the growth in personal consumption expenditures, which command a hefty 70% of the nation’s gross domestic product.
Though overall retail sales climbed in August, demand for items like furniture and electronics has fallen nearly 2% and 6% year over year—the only negative yearly changes among the types of businesses tracked by the Commerce Department, according to the latest data.
The one housing-related industry in which more consumers say they’ll spend more—instead of less—is home improvement, notes Bank of America. On Monday, R5 Capital analyst Scott Mushkin downgraded Lowe’s stock and said risks to the housing market are “too big” for him to recommend that investors buy shares, but other analysts, including Atlantic Equities’ Sam Hudson, note the post-Covid environment bodes well for home-improvement firms, particularly since fewer Americans buying homes may mean more people are likely to invest in their existing property.
The housing market continues to be one of the sectors hardest hit by the Fed’s rate hikes, and concerns that the downturn could spark a recession have only intensified as a result. With mortgage applications plummeting to their lowest level since 1997, some analysts predict the plunging demand will spark a correction in home prices. On Tuesday, the International Monetary Fund said the “potential contagion effect” of such a correction would likely be “more limited than in previous recessions,” but it noted risks are emerging elsewhere in the housing sector, especially in the United States, where more firms have started playing a role in the securitized mortgage market.
Mortgage applications plummeted 14.2% from one week prior in the seven days ending Friday, pushing overall applications to their lowest level since 1997, according to data released Wednesday by the Mortgage Bankers Association. Surging rates have tacked on $337, or 15%, to the typical monthly mortgage payment over the past six weeks alone and pummeled housing demand nationwide as a result—so much that prices have started to slip from record highs in some markets over the past few weeks.
According to real estate brokerage Redfin, the median home sales price has climbed 7% to $369,250 over the past year, but prices in San Francisco have ticked down 4%, while those in neighboring Oakland and New Orleans have fallen 0.5% and 11%, respectively. Though he’s not expecting a nationwide correction, Tejas Joshi, a director at investment firm Yieldstreet, expects home prices could face 20% decline in some regional markets where new home construction will bolster supply— builders will be forced to slash prices “aggressively” in the coming months in areas like Dallas, Austin, Texas, and Boise, Idaho.
He also expects the correction will be worse for pandemic-era hot spots like Phoenix, Austin and Las Vegas that have seen an influx of new residents over the past two years, exacerbating affordability concerns that have made some markets—including a high concentration in the western U.S.—vulnerable to a housing market correction, according to Goldman Sachs. Goldman notes that 9% of active listings have cut prices on Zillow (mainly in areas that saw a sharp run-up in prices during the pandemic), which suggests that less affordable areas—such as Western cities like Seattle, San Diego and Los Angeles—are most susceptible to a correction, while more affordable metros in the South are likely better positioned to avoid one.
Goldman chief credit strategist Lotfi Karoui says national home prices will likely avoid a correction next year, but he expects 39% of metropolitan areas will experience price declines.“It’s important to remember that much of the housing market data . . . being reported are based on home purchases that were agreed to a month or more ago, when mortgage rates were a point and a half lower,” says Redfin economist Taylor Marr. “Sellers should anticipate that buyers are unwilling or unable to pay a price similar to what their neighbor’s home sold for a month ago.”
Other areas that may not face much of a housing price correction are those with low levels of new construction, says Joshi. He notes many markets in the Northeast, for example, have “quite low” incoming supply and that most sales come from existing homes, making it likely that homeowners will simply stay in place for longer as opposed to selling at lower prices.
"Sentiment is palpably horrible," says one analyst as more experts turn increasingly bearish on the ... [+] AFP via Getty Images
A growing rash of economists are warning the odds of a recession have increased amid a historic inversion of the yield curve—a telltale sign of a looming economic slowdown after the Federal Reserve on Wednesday raised rates to the highest level since the Great Recession and signaled its policy would be more aggressive than previously anticipated.
Yields on the 10-year Treasury surged more than 10 basis points to nab a new 11 year-high of 3.829% on Friday, while the 2-year Treasury hit a 15-year record of 4.266%—deepening the yield curve inversion to some 50 basis points, the widest gap in more than 30 years.
Since July the yield curve has been inverted—when short-term yields fall below longer-term returns—in a sign investors are more bearish about the economy’s long-term prospects, and the inversion only deepened after the Fed on Wednesday raised rates by 75 basis points and suggested it may institute another unusually large hike again in November.
In a note to clients, analyst Tom Essaye of the Sevens Report explained the steepening inversion “makes sense” because a more aggressive Fed, and higher rates that make borrowing more expensive, will temper demand and stunt economic growth in hopes of reducing inflation, but he also warned the magnitude of the inversion has become “very concerning.”
A Federal Reserve study in 2018 found every recession in the past 60 years has been preceded by a yield curve inversion, and Essaye says the widening gap between 2-year and 10-year Treasurys is “screaming that a serious economic contraction is coming,” adding “everyone should be preparing” for a material economic slowdown in the coming months and quarters.
In a Friday note, Bank of America economists said they expect the economy will fall into a recession in the first half of next year, with real GDP falling 1% after adding 5% last year, and unemployment rising to 5.6%—potentially wiping out more than a year of job gains.
Fed officials doubled down on their most aggressive economic tightening campaign in three decades on Wednesday, raising interest rates by three-fourths of a percentage point for the third time in a row and pushing borrowing costs to 3.25%—the highest level since 2008. Though they had originally projected the federal funds rate would only climb to 3.4% this year, they now project it will climb to 4.4%, suggesting another 75 basis point hike could be on the table in November.
“With this new alignment between the Fed and markets, the questions now are when and how bad the recession will hit,” says Mace McCain, the chief investment officer of Frost Investment Advisors. Stocks plunged deeper into bear market territory after the Fed’s hawkish message, with major indexes eclipsing yearly lows on Friday. The S&P 500 is down 23% this year, and economists at Goldman project it will sink another 3% by December and could take more than a year to recover losses.
The tech-heavy Nasdaq has plummeted 32% since January, the Dow nearly 20%. “Looking out over the next one to two months, we don’t have much conviction at all on equities,” says Adam Crisafulli, founder of Vital Knowledge Media. “Sentiment is palpably horrible.” Existing home sales fell for the seventh straight month in August as rising interest rates continued to sideline potential home buyers, according to the National Association of Realtors.
In a statement, the association’s chief economist Lawrence Yun called the housing sector “most sensitive to” the Fed’s interest rate hikes and said the softness in home sales reflects this year’s escalating mortgage rates, which hit a 15-year high of nearly 6.3% this week—driving up the cost of monthly payments on new mortgages by more than 55%, an average of hundreds of dollars each month.
Despite pockets of the economy already reeling from the Fed’s hawkish policy, the job market remains firmly strong, effectively justifying the aggressive action. Initial jobless claims were little changed this week and continued claims actually edged lower. However, many experts say it’s inevitable that the labor market will soon start to cool. “It’s possible that the unemployment rate could gently glide higher and wages cool without an outright recession—but it’s never happened before,” says Bill Adams, chief economist for Comerica Bank.
Though it slowed for a second-month straight, inflation clocked in at a worse-than-expected 8.3% in August—far worse than the Fed’s long-standing target of 2%. Bank of America economists project inflation won’t return to that level until the end of 2024.
I’m a senior reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business
The decision by the US Federal Reserve to raise its key interest rate by another 75 basis points this week, and its plans for further increases, have raised the spectre of a global economic slowdown. Overnight, the Bank of England lifted its key rate by 0.5%, matching Indonesia and the Philippines, while the Swiss National Bank and South Africa opted for a 0.75 percentage point rise.
Tooze, a history professor at New York’s Columbia University and a frequent contributor to the Guardian, has detailed the gathering economic headwinds and has analysed for Guardian Australia the key areas of the current financial turmoil.
‘Extremely severe’ recession risk
The chances of a global recession were now “extremely severe”, as central banks in many parts of the world raise interest rates to curb inflation. “It’s the single most dramatic simultaneous tightening of monetary policy ever,” Tooze said. The winding back of Covid support packages by governments as the pandemic tide recedes also meant fiscal brakes were being tapped.
“US fiscal policy right now is massively contractionary,” Tooze said. “It’s a 4.5% of GDP negative drag.”
Textbook moment of ‘failed technocracy’
Tooze predicted the current policies of central banks and governments would be marked in future textbooks as a “classic moment of failed technocracy”. The US Fed Reserve lifted its cash rate target range by 75bp to 3% to 3.25% on Wednesday, US time. It also indicated it expected increases of as much as another 125bp this year even as Fed chairman Jerome Powell warned of a possible recession.
Tooze said other central banks will be under pressure to follow. Australia’s Reserve Bank governor, Philip Lowe, said last week the bank would probably lift its cash rate 25bp or 50bp on 4 October, making it a record six increases in as many months. The lives of 100s of millions of people and their employment prospects would be scarred by a recession, Tooze said: “This will mark those people’s lives for the rest of their lives.”
Australian fallout
Private economists forecast Australian property price falls of as much as 20%, the steepest decline since the 1980s as rates rise. Tooze said Australia and Canada had two of the “most overheated” property markets in the world, and he predicted “huge effects” from higher borrowing costs.
One source of support for the market might also be less forthcoming in the future. The surge in both Chinese students and property buying in Australia, US and elsewhere, had partly been a “capital flight story”, he says. Buying a flat to provide accommodation while studying was one way to get money out of China.
Signs have lately been mounting of a renewed effort by Chinese to move money abroad ahead of a major Chinese Communist party meeting in Beijing next month that will formally extend the leadership of President Xi Jinping. To counter that capital flight, authorities are making it harder for people “beyond certain networks” to access passports, Tooze said. “It’s really quite difficult now for the Chinese to discreetly exit.”
China worries
The RBA deputy governor, Michele Bullock, on Wednesday described the global economy as being “on a bit of a knife-edge”. One reason was the fragile state of China’s economy. Its Covid-zero policy disrupted supply chains and a plunging property market had “still not worked itself out”, she said. Demand for Australian iron ore, in particular, hinged on the success of government efforts to support real estate.
The Chinese property bubble is not just any property bubble – it’s the largest single phase of accumulation of wealth in economic history,” Tooze said, noting the number of private property owners had jumped from near zero to 300 million in a few decades. “They poured more concrete in three years [in the early 2010s] than the United States in all of the 20th century,” he said. The Chinese government may yet stabilise the market.
“The amazing thing is that big money in the west is taking a huge gamble on the capacity of an authoritarian regime unfettered by the rule of law to pull off the largest single exercise in macro-prudential, macro-financial stabilisation the world has ever seen,” Tooze said. Assuming they can do that, BHP, Rio Tinto and Fortescue – and a large part of the Australian economy – “are all fine”.
One cause for optimism
Tooze said the “extraordinary progress” in cutting the cost of solar and wind energy was a “real case for optimism”, at least as far as action to limit global heating was concerned. “The disappointment is we could be even further down those cost curves” if the US and Europe and elsewhere had matched China’s investment. Improving battery technology would be “fundamental” to advancing decarbonisation efforts because of the intermittency of renewables.
He cited data from the International Energy Agency on total public funded energy research – totalling $US23bn ($A35bn) in 2021 – as proof we can do more. “If we were serious about the energy transition,” he said, “you’d think we would be collectively spending more than what Americans spend [each year] just on treats and food for their dogs and cats”.
The U.S. economy shrank for a second quarter in a row this year, a second estimate from the Bureau of Economic Analysis confirmed Thursday—once again signaling the start of a technical recession even as economists predict signs of a slowdown will only grow in the coming quarters, likely prompting the government to officially declare the economy has entered a recession.
The U.S. economy shrank at an annual rate of 0.6% in the second quarter despite average expectations originally calling for a 0.3% increase—marking the second consecutive quarter of negative gross domestic product growth and thereby signaling the economy has entered a technical recession, the Bureau of Economic Analysis reported in a second estimate released Thursday.
The figure was worse than the 0.5% decline economists were expecting, but ticked up from the 0.9% decline estimated last month.The government blamed the worse-than-expected figure on declines in residential investments (or home buying), federal government spending and business inventories, but said an uptick in exports and spending helped economic activity improve from last quarter’s decline of 1.6%.
According to one working definition, a recession comprises two consecutive quarters of negative GDP growth, says Wells Fargo senior economist Tim Quinlan—but it’s not the official one: Instead, the definitive call is up to the National Bureau of Economic Research, which defines a recession as “a significant decline in economic activity” lasting “more than a few months.”
Quinlan points out four of the six factors the NBER relies on to declare a recession—production, income, employment and spending—continued to signal expansion through May, but he notes production appears to be “losing steam” and income gains are struggling to keep up with inflation, all while unemployment claims rise and consumers start spending less.
Like other economists, Quinlan isn’t convinced economic indicators last quarter were indicative of a current recession, but he warns the economy is slowing and “it is starting to feel like [entering one] is only a matter of time.”
“We do not think the economy is in recession at present, but if our forecast is correct, this is not so much of a head fake as it is a harbinger of worse to come,” says Quinlan, who argues the negative GDP growth in the first half of the year isn’t likely a function of weak underlying demand but instead due to “one-off” volatile factors such as net exports and inventories. “We expect the loud wailing of an actual recession to begin early next year,” he adds.
The government will update its estimate, based on more complete data, for a third and final time in September.
Though economist projections continued to call for a return to growth in the second quarter, the Federal Reserve Bank of Atlanta’s GDPNow model in July began signaling the start of a technical recession, pushing its GDP forecast into negative territory after economic data showed consumer spending dropped in May. “The model’s long-run track record is excellent,” say DataTrek analysts Nicholas Colas and Jessica Rabe, pointing out its average error has been just 0.3 points since the Atlanta Fed started running it in 2011.
Ahead of the GDP print, the model projected the economy shrank 1.2% last quarter. It now projects the economy will grow 1.4% in the third quarter. The Fed’s withdrawal of pandemic stimulus measures and interest rate hikes this year have fueled concerns of impending recession. In July, Bank of America economists warned clients that prolonged inflation and the resulting interest rate hikes have unleashed a “worrying deterioration” in the economy, and particularly in the once-booming housing market.
“The Fed has become more committed to using its tools to help restore price stability, with a willingness to accept at least some pain in the process,” they said, predicting the economy will fall into recession over the next year.
The International Monetary Fund warned on Tuesday of a slowdown in global economic growth as the world economy continues to take a hit from “increasingly gloomy developments in 2022,” including high inflation, a slowdown in China caused by Covid lockdowns and ongoing fallout from Russia’s war in Ukraine.
The IMF slashed its global growth projections, now expecting global GDP to grow 3.2% this year and 2.9% in 2023, down from previous estimates in April of 3.6% GDP growth for both years.
The group cited a slowdown in the world’s three largest economies—the United States, China and the euro area—as a reason for the revised estimates, warning that the risks to the outlook remain “overwhelmingly tilted to the downside.”
Several “shocks” have hit the global economy as it tries to recover from the pandemic, including higher-than-expected inflation worldwide––especially in the United States and Europe, a worse-than-anticipated slowdown in China caused by Covid lockdowns and “further negative spillovers” from the war in Ukraine.
The IMF also said that high inflation remains a “major problem” as prices have continued to rise in 2022, led by soaring food and fuel costs, arguing that “taming inflation should be the first priority for policymakers” worldwide.
The group now expects global inflation to hit 6.6% in advanced economies and 9.5% in developing economies this year, though prices are expected to return to near pre-pandemic levels by the end of 2024.
The IMF also slashed its growth estimates for the U.S. economy, now forecasting GDP to rise 2.3% this year and 1% in 2023, down from previous estimates of 3.7% and 2.3%, respectively, amid the impact of tighter monetary policy and reduced household purchasing power.
“The outlook has darkened significantly since April,” IMF chief economist Pierre-Olivier Gourinchas said in a statement. “The world may soon be teetering on the edge of a global recession, only two years after the last one.”
“The slowdown in China has global consequences,” the IMF said. “Lockdowns added to global supply chain disruptions and the decline in domestic spending are reducing demand for goods and services from China’s trade partners.” The group now sees China’s economy growing 3.3% in 2022—its lowest pace in four decades and down over 1% from previous estimates.
The World Bank similarly slashed its forecasts for the global economy last month, predicting GDP growth in 2022 of just 2.9%, down from an earlier estimate of 4.1%.
I am a senior reporter at Forbes covering markets and business news. Previously, I worked on the wealth team at Forbes covering billionaires and their wealth.
The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. Many of the downside risks flagged in our April World Economic Outlook have begun to materialize. Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions.
China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year. Under our baseline forecast, growth slows from last year’s 6.1 percent to 3.2 percent this year and 2.9 percent next year, downgrades of 0.4 and 0.7 percentage points from April.
This reflects stalling growth in the world’s three largest economies—the United States, China and the euro area—with important consequences for the global outlook. In the United States, reduced household purchasing power and tighter monetary policy will drive growth down to 2.3 percent this year and 1 percent next year.
In China, further lockdowns, and the deepening real estate crisis pushed growth down to 3.3 percent this year—the slowest in more than four decades, excluding the pandemic. And in the euro area, growth is revised down to 2.6 percent this year and 1.2 percent in 2023, reflecting spillovers from the war in Ukraine and tighter monetary policy.
Despite slowing activity, global inflation has been revised up, in part due to rising food and energy prices. Inflation this year is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies—upward revisions of 0.9 and 0.8 percentage points respectively—and is projected to remain elevated longer. Inflation has also broadened in many economies, reflecting the impact of cost pressures from disrupted supply chains and historically tight labor markets.
Future Forum’s latest report, which surveyed more than 10,000 workers during August, found that overall work satisfaction scores dropped 15% for executives, who also reported work-life balance scores that were 20% worse and work-related stress and anxiety scores that were 40% higher....getty
