Convention Board Chief Economist Dana M. Peterson speaks to Fox Information Digital about decelerating CEO confidence and her long-term inflation outlook.
American customers hoping for a swift finish to years of inflationary pressures are dealing with a harsh actuality verify.
Whereas current reduction on the gasoline pump supplied a brief reprieve, company provide chain strains and the lingering results of worldwide commerce and geopolitical shocks are anticipated to maintain costs elevated for the foreseeable future. In line with The Convention Board Chief Economist Dana M. Peterson, on a regular basis Individuals will proceed to really feel the squeeze on the grocery retailer, with the Federal Reserve’s 2% inflation goal remaining out of attain till a minimum of 2028.
“I feel that customers are going to proceed to complain about elevated costs going ahead as a result of CEOs do not actually have a lot of a selection… Inflation, together with the 2 huge shocks of tariffs and the warfare, in all probability peaked within the second quarter of this yr, and we’ll see inflation slowly decelerate over the course of this, nevertheless it’s nonetheless gonna be excessive,” Peterson advised Fox Information Digital.
“Headline [personal consumption expenditures] will in all probability peak within the third quarter of this yr, once more, as it may replicate these pass-through costs from the shock from the warfare,” she added. “And naturally, the [consumer price index] numbers are going to in all probability be increased as a result of… they’re simply totally different measures. However nonetheless, we’re not going to be anyplace near 2% inflation by the tip of this yr, and doubtless not till someday in 2028.”
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The consequence, the economist mentioned, is a major shift in how Individuals are spending their cash.
Individuals store for groceries at a retailer in Arlington, Virginia, on June 10, 2026. (Getty Photos)
“Shoppers are spending much less on costly items and companies and extra on cheaper choices. They’re additionally shifting the composition of their spending to issues which might be extra crucial relatively than discretionary,” Peterson mentioned. “Shoppers are shying away from these big-ticket objects.”
In June, The Convention Board’s Measure of CEO Confidence, performed in collaboration with The Enterprise Council, surveyed 141 CEOs and located the general rating fell to 47 in Q2 from 59 in Q1. Any studying under 50 means destructive financial outlooks outnumber constructive ones.
Solely 15% of CEOs say the economic system is healthier than six months in the past, down from 39% in Q1, whereas 47% say it is worse, up from 8%. Moreover, 40% of respondents count on financial situations to worsen over the following six months, in contrast with 13% who felt that manner final quarter.
New York Fed President John Williams speaks stay from the Federal Reserve, providing insights on the economic system’s regular development and secure labor market.
“It actually wasn’t stunning that CEO confidence fell as a result of the survey happened within the span of Might 4 by Might 18, which was the peak of the battle within the Center East,” Peterson mentioned, including that peace negotiations with Iran are underway and thus assuaging quick worries.
“So I might think about CEOs’ confidence could be materially higher immediately, even when it is nonetheless considerably destructive. And certainly, the industries that will in all probability be essentially the most harmed are those that use inputs like fossil fuels, fertilizer, chemical compounds like ammonia and sulfur to supply spinoff merchandise like groceries, and likewise aluminum by way of building. But in addition, the companies round these issues like eating places and retailers – who’re principally going to be feeling the crunch – might want to cross these prices on to customers.”
The current survey additionally discovered that 31% of executives plan to cut back their workforce. Peterson mentioned these deliberate cuts are closely concentrated in industries investing in automation.
“I feel that customers are going to proceed to complain about elevated costs going ahead as a result of CEOs do not actually have a lot of a selection… Inflation… it is nonetheless gonna be excessive.”
“A lot of the layoffs are concentrated in industries which might be really creating new applied sciences like AI and quantum computing, the sooner adopters, and jobs which might be simply automated. So these sectors positively embrace tech… something in finance,” she mentioned. “I might additionally embrace transportation and warehousing industries, as a result of a whole lot of what they’re doing may be automated. After which lastly, I might say retail companies which have very massive on-line footprints and might outsource a whole lot of the customer support are additionally letting folks go.”
Whereas post-pandemic wages are technically increased on paper than the historic averages seen between the 2008 monetary disaster and 2020, structural prices like housing, insurance coverage and healthcare have essentially altered customers’ buying energy, in keeping with the economist.
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“Many companies are literally turning into dearer, like housing, utilities, healthcare and insurance coverage. Costs are additionally rising attributable to these structural adjustments like growing old populations, technological development, pure disasters, growing demand for healthcare, and likewise a dearth of reasonably priced housing coupled with elevated mortgage charges. So all of those pricing pressures are forcing customers to make robust choices.”
Regardless of the pessimism amongst C-suite executives and plenty of customers, Peterson mentioned she doesn’t count on the U.S. economic system to enter a downturn throughout the subsequent six months.
“Do I count on slower development due to the inflation shocks? Positive, however the U.S. economic system can develop anyplace from 1.5% to 2% and be simply advantageous,” she mentioned. “One-percent [GDP growth] is form of stall velocity, and it appears like a recession, and it additionally will increase the chance that you simply do go right into a recession. That is not what I am anticipating.”
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As a substitute, Peterson suggested customers to look previous Wall Avenue’s day-to-day market swings and monitor authorities labor market knowledge as a substitute.
“I might not have a look at the inventory market as a result of monetary markets are monetary markets. They don’t seem to be the actual economic system,” she mentioned. “I feel a straightforward measure for most individuals is jobless claims… They’re principally the quantity of people that file for unemployment insurance coverage each month. And to date, that quantity’s been very low, near historic lows. So should you begin seeing that quantity [in] the course of a month – or a number of months – begin to rise precipitously, that is a sign that one thing’s incorrect.”
