Wall Street thinks America will enter recession before 2025 ends

Wall Street is now preparing for a recession to hit America before the year wraps, according to new data from CNBC’s Q1 2025 CFO Council survey.

The survey, which included responses from 20 chief financial officers across U.S. industries between March 10 and March 21, shows that 60% of them believe the economy will contract in the second half of the year. An additional 15% expect that recession to land in 2026. Confidence is low. The mood is worse.

The warning comes just days after a short-lived stock market rally kicked off the week. Markets opened up following public comments from Donald Trump’s economic team suggesting a more relaxed approach to tariffs.

By Tuesday morning, there was still some momentum in equities. But behind the scenes, corporate leaders aren’t buying the optimism. The tone in boardrooms has turned bleak. Executives are no longer asking if recession is coming. They’re debating when.

CFOs say Trump’s second term is hurting business confidence

The same CFOs surveyed say the situation in the White House is only making things worse. Nearly all respondents said the Trump administration’s policy direction is unpredictable and confusing.

While some acknowledged that Trump is delivering on the promises he made during his campaign, they say the way he’s doing it has become a liability. One CFO, who chose to remain unnamed in the report, said the administration’s current direction is “too chaotic for business to navigate effectively.”

The CNBC survey captured several descriptions from different executives who all seemed to agree on the mood: “Extreme,” “Disruptive,” “Aggressive,” and “A wild ride.” None of them used words like “stable,” “clear,” or “focused.”

Three months ago, in the Q4 2024 survey, only 7% of CFOs predicted a 2025 recession. That round of questions focused more on the Federal Reserve’s battle against inflation.

But now, with Trump’s trade strategy dominating the conversation, CFOs have changed their tune. Trade policy has become the top concern for executives, with 30% naming it as their biggest external business risk. Inflation was second at 25%, and weakening consumer demand followed at 20%.

Consumer confidence data is adding to the anxiety. The latest read on how Americans feel about income, jobs, and overall economic health just fell to its lowest level in 12 years.

Executives say that a mix of weak consumer sentiment, price pressure, and uncertainty out of Washington is pushing the entire country toward a downturn.

And it’s not just boardroom gossip. Financial firms across Wall Street have started publishing new “recession watch” indicators. Some analysts now say the odds of a recession are close to 50%.

Tariff concerns trigger fears about inflation and yields

The number one inflation trigger on CFOs’ minds is tariffs. Ninety percent of those surveyed said that tariffs will create what they called “resurgent inflation.”

While Fed Chair Jerome Powell recently claimed the inflation surge from tariffs may be “transitory,” most executives disagree. Half of them now believe America will not hit the Fed’s 2% inflation target until at least the second half of 2026 or even 2027.

Yields aren’t helping. A majority of CFOs—65%—expect 10-year treasury yields to stay between 4% and 5% through the end of 2025. Half of that group thinks they’ll hover around 4% to 4.5%, right where they sit today. If that happens, borrowing costs will remain high and credit conditions will stay tight, which only makes the recession case stronger.

Even worse, when CFOs were asked which sector of the stock market they believe will perform best over the next six months, the most common answer wasn’t tech, healthcare, or energy. It was “Don’t know.”

That marks the first time since CNBC began running this survey that none of the three usual leaders were picked. The uncertainty is that deep. CFOs aren’t even willing to make a guess.

Spending plans are also being scaled back. Compared to the previous quarter, 10% fewer CFOs now say their company will increase capital expenditures this year.

While 45% expect spending to stay flat, only 35% are still planning to increase budgets. Another 20% have decided to cut back. The direction is clear. Growth strategies are slowing down, and companies are holding tight.

The same tone carried into expectations for the stock market. Ninety percent of CFOs said the Dow Jones Industrial Average will revisit 40,000 before ever reaching 50,000. The index is already showing signs of instability. Executives expect more losses in the months ahead, not less.

Most CFOs expect a mild recession, but few are confident in leadership

Despite the gloom, the severity of the expected recession may not be catastrophic. Ninety percent of CFOs think the downturn will either be mild (40%) or moderate (50%). But even that’s not great news. A recession, even a small one, is still a recession. Especially for crypto investors, where volatility thrives in economic panic.

More troubling is the overwhelming sense of uncertainty surrounding policy. A massive 95% of surveyed CFOs admitted that policy unpredictability is directly affecting how they run their companies. From hiring to investment to expansion, most decisions are now being filtered through the lens of Washington’s instability.

That mood showed up again when CNBC asked CFOs how they feel about the overall state of the economy. Seventy-five percent said they are “somewhat pessimistic” about where America stands today.

That’s even as 75% of those same respondents said they’re still optimistic about their own industries. They believe their sectors might hang in, but they’ve lost faith in the bigger picture.

Some executives tried to stay hopeful. One CFO said, “I feel the current administration is seeing how far they can push before anything breaks. I am hopeful after the first 100 days that things will moderate.” But others were far less optimistic. Another simply responded, “Complete chaos, without an end game strategy.”

The survey doesn’t offer a clean answer. But it does offer a loud one. Business leaders are not in sync with markets. They’re watching trade decisions from Trump’s second-term team unfold in real-time, and most of them are already preparing for a downturn. No one is betting on a fast recovery. No one is talking about growth.

According to CNBC, CFOs across America are no longer reacting to warning signs. They believe the damage is already in motion.

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot