Recession? Yes, No, Maybe so?

On a recent morning commute to FMA HQ, I was listening to the radio when the announcer used the words ‘dangerous heat’ to tease the upcoming weather report. I understand that 95 degrees Fahrenheit (that is 35 degrees Celsius for our friends in both Canada and Mexico) is hot and some folks may be compromised if they are in the sun too long.  

I appreciate the announcer’s art of the tease approach, trying to keep listeners from switching channels and to create enough intrigue in the upcoming weather report so that the audience will hopefully stay tuned.  

But frankly, the fact that it is hot in Illinois in June is nothing new. Summertime in Illinois means both hot and sticky weather. Just like the radio broadcaster, the words we choose to use as leaders can have a strong impact.  

One recent example comes from JPMorgan’s CEO Jamie Dimon. He was recently discussing the economy with the gathered group of investors at a Bernstein Conference when he said, “Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this.  That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy.  You better brace yourself. JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”

Those were weighty and attention-getting words especially when they are uttered by someone of Jamie Dimon’s stature. Most every information provider platform, be it app, newspaper, broadcast, or website quickly delivered the key quotes of “hurricane” and “Superstorm Sandy” in bold and loud headlines to reinforce who said them and underscore their impact. Mr. Dimon’s choice of the word ‘brace’ is interesting to me as it seems to be carefully selected to convey a message that JPMorgan is prepared and ready to manage through any scenario.

Another example of leadership word power comes from Wells Fargo’s CEO Charlie Scharf who was recently speaking at the Wall Street Journal’s Future of Everything Festival where he said there was ‘no question’ the U.S. was heading for an economic downturn of some kind. Mr. Scharf also went on to add that “I think it’s going to be hard to avoid some kind of recession, but I also get the fact that everyone (consumer demand and business activity) is so strong going into this, [which] should hopefully provide a cushion so that whatever recession there is, if there is one, is short and not all that deep.”  

Mr. Scharf’s choice of words and delivery style are far different from Mr. Dimon’s but are no less impactful.

A final example is from Tesla CEO Elon Musk who recently commented via email to Tesla executives that he had a ‘super bad feeling’ about the economy.

The desire to add sizzle and be the headline of the day gets in the way of the reality we face. We know that consumer spending remains strong, and that many used their government pandemic relief funds to either create savings or pay off credit card debt. 

As a leader, you have spent the last two years looking at your business up and down, building in precautionary measures, and honing in on opportunities to create long-term stability. While there will always be storms we need to weather, we cannot lose sight of all the work our industry has done to prepare for further disruptions.

While these leaders are all indicating a recession is on the horizon, our own Economist Dr. Chris Kuehl has a much more measured approach which you can read about in the June 15 edition of FMA’s Member eNewsletter, Fabrinomics®.   As to the power of Dr. Kuehl’s words I’ve included his analysis’ final paragraph for your consideration.  “It is very hard to avoid noticing the threats that seem to pour from the economic analysts, but some balance is required.  The arrival of a recession in 2023 depends on actions by the Federal Reserve, and thus far they are asserting they are not prepared to take these radical steps.  This does not mean they will not want to act more aggressively in the future. They are stuck waiting for an end to the Ukraine war and the recovery of the supply chain-just like the rest of us.”

Dr. Kuehl’s words lack the excitement and boldness of the many guests who appear on shows like CNBC’s Mad Money with Jim Cramer, however I know that I can rely on them to discuss a serious topic with my team, provide context and help us to consider our next steps as we navigate our way through the rest of 2022. Whether you agree or disagree with Dr. Kuehl’s perspective, I hope we can at least agree that both words and context have power, and the right ones can provide your team with confidence and direction when it is needed most.