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C-suite execs prepare to bring out cost-cutting ax amid economic concerns: Survey

C-suite execs are poised to slash expenses as the rolling banking crisis takes its toll on demand and forward economic outlooks.

A new survey out Friday from BCG showed that about 75% of 759 global C-suites executives think macroeconomic uncertainty is the biggest challenge facing their businesses in 2023. That uncertainty has also been exacerbated by the recent failures of prominent banks Silicon Valley Bank, Signature Bank (SBNY), and Credit Suisse (CS).

"The recent failure of Silicon Valley Bank and others shows how difficult it is for executives to anticipate/ predict the future, even in the near-term," the report said. "Therefore, it is crucial for C-suite leaders to continue strengthening cost-down efforts and building resilience while fueling long-term growth."

Chairman of the Swiss National Bank (SNB) Thomas Jordan (R) walks next to the Swiss house of Parliament on his way to the Swiss Federal Department of Finance for talks on Credit Suisse bank crisis, in Bern on March 19, 2023. - UBS was up against the clock on March 19, 2023 in talks to finalise a mammoth takeover of its troubled rival Swiss bank Credit Suisse and reassure investors before the markets reopen. Switzerland's biggest bank UBS is being urged by the authorities to get a deal over the line in a bid to avoid a wave of contagious panic on the markets Monday, according to several media reports. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
Chairman of the Swiss National Bank (SNB) Thomas Jordan (R) walks to the Swiss Federal Department of Finance for talks on Credit Suisse bank crisis, in Bern on March 19, 2023. (Photo by FABRICE COFFRINI/AFP via Getty Images) (FABRICE COFFRINI via Getty Images)

Companies are locked and loaded to protect their profits against the volatile backdrop, the survey found.

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"Regardless of region, cost reductions are a key priority, with a focus on efficiency, instead of pure cost-cutting," the authors wrote. In North America, execs are particularly focused on reducing talent and finding other ways to bolster productivity.

The clampdown on hiring and expenses comes as Wall Street begins to warn about the aftershocks of recent bank failures.

The likelihood of a U.S. recession is on the rise again for the first time since November 2022, according to the latest BofA fund manager survey released this week. About 42% of fund managers surveyed see a recession happening within the next 12 months, up from 24% in February.

Goldman Sachs Chief Economist Jan Hatzius noted last week he sees a 35% chance of a U.S. recession in the next 12 months, up from 25% previously. The increase in odds reflects "increased near-term uncertainty" around the economic effects of small bank stress.

Hatzius also cut his 2023 GDP forecast by 0.3 percentage points to 1.2%.

"It's [a recession] not a sure thing," Moody's Analytics chief economist Mark Zandi said on Yahoo Finance Live. "I mean, we do need a little bit of luck. We should be able to navigate through without an economic downturn. It's not going to be easy. I'm not saying it's not going to be really bumpy and uncomfortable. At times like now, it's pretty uncomfortable. But I think we'll be able to navigate through."

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com

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