With the recession already taking down many Americans, this hurricane of destruction is on its way toward Wall Street to cripple our economy in a whole other way.
JPMorgan Chase CEO Jamie Dimon was recently on a call with investors where he warned of this happening. “There are very good numbers coming in. That’s the current environment. The future environment, which isn’t that far off, involves rates going up, maybe more than people think because of inflation.” The previous month he had forecasted this economic CAT 4 “hurricane” while adding that there is a wide verity in the “range of possible outcomes from a soft landing to a hard landing.”
Given how much the talks of recession are dominating the quarterly earning calls, investor meetings, online message boards, and the water cooler talk, this is impacting everyone. Yet, nobody can clearly understand exactly how much worse this will have to get until it gets better.
Looking at how people are assigning blame for this on everything from the ongoing pandemic to the chip shortage, to shipping backups, to the President, etc., it becomes clear that this recession has many different nuances that influence how fast it came on and how.
For people in a CEO position like Dimon, this level of recession is nearly unfathomable. The last time it was this bad was back in 1981, when Dimon was 25 and still in Harvard Business School. At this point, only Warren Buffett seems to be the only Fortune 100 CEO who has seen it this bad while actively investing. Besides identifying how it happened, these CEOs are also responsible for determining the rest of the impact on their business and how to stay the course.
Another scenario that no CEO period has lived through is the aftermath of a pandemic. The COVID pandemic’s rippling effect on our economy cannot be overstated. Everything from toilet paper to ice cream to canned goods was impacted at some point. With inflation now impacting these same revenue streams, there’s a variety of ways to interact with this situation, and not all the options make people feel comfortable or secure.
That’s where the CEO comes in. Their job is to put the hat and lipstick on the pig. Even when it’s horrific news that this financial “hurricane” is about to rock our company to its foundation, people will remain calm if the CEO presents well. The right words, tone, body language, and way of presenting the information are crucial. Almost as crucial as having your investors and employees believe in you and your vision for the future.
Oddly enough this situation also presents a unique opportunity for many investors and companies. Inflation like this can flush out the bad companies and can shine a bright light on CEOs who fail to live up to expectations. It allows investors to see what they and the teams they assemble can do. To not only stay afloat but to thrive under such austere conditions.
For many, this kind of dedication is a challenge that no matter how they try they will fall short of the expectations they and others have set. However, the true visionaries will make their mark on the stock market, in the minds and wallets of investors, and their employees by making the right decisions.
An anonymous CEO of a major financial firm recently made his expectations on the status of this recession clear. “I’ve been talking to a lot of people who run big companies and none of them think inflation has peaked. Really, the only question is about whether the recession is shallow or deeper and more prolonged… What I would criticize the administration for is they rely on economists rather than those deeply engaged in the economy. And it’s been hard or impossible for any economist to get any of this right because of the incredibly unique nature of all these disruptions.”