An intriguing poll, with some rather stark findings, is circulating in the financial community today. A survey conducted by the Committee for Economic Development, the public policy center of The Conference Board (CED), is stoking fears about a potential stock market crash. Retail investors are already on edge, so hearing that many CEOs are feeling similarly jittery about the state of the economy isn’t a great thing to read.
Specifically, the report noted a key takeaway, which was that 91% of all CEOs are concerned that a potential shutdown (lasting more than a day or two) will negatively impact the economy. More than 80% of respondents said that the U.S. credit rating is likely to take a hit, and interestingly, these results were bipartisan (across the political spectrum).
The deadline for agreement on appropriations bills is Oct. 1. If no deal is reached in the House before then, we will see a shutdown materialize. And the proposed Senate bill has virtually no chance of passing in its current state.
Let’s dive more into what these CEOs believe could happen if we see a shutdown — and what they’re doing about it.
Stock Market Crash Concerns Pick Up in the C-Suite
In addition to the 42% of CEOs that reported they were “very concerned” about a government shutdown and the 49% that said they were “somewhat concerned,” CEOs appear to be taking a cautious wait-and-see approach to what will eventually happen.
Only 44% of CEOs said they would significantly or moderately adjust their business plans as a result of this government shutdown. Thus, for the majority of companies, it will be business as usual moving forward. This finding makes sense.
Most CEOs also stood behind the belief that a bipartisan congressional committee on fiscal responsibility could be a step in the right direction. The survey indicated that 87% of respondents would support such a proposal and believe it would be successful.
Of course, it’s impossible to predict market crashes. When they happen, plenty of blame is typically spread around, but there’s usually a catalyst driving significant volatility. This upcoming government shutdown may not necessarily be that catalyst, but it will be a key event to watch, as companies look to maneuver through more uncertainty.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
