Recession is coming
What do you mean you have $11k in "doordash debt"
That's the headline of an article from a survey of corporate CFOs in the US.
It all adds up to a majority of CFOs (60%) saying they expect a recession in the second half of the year – another 15% say a recession will hit in 2026.
Just a quarter ago, when the recession question in the quarterly survey was laid on the Fed rather than Trump – in the Q4 2024 survey, we asked whether the central bank’s efforts to tame inflation would lead to an economic slump – only 7% of CFOs said they thought that was on the calendar for 2025.
Want to chat about the upcoming recession?
Let's grab a drink and chat
Tomorrow, Wednesday 26th, I'm hosting a "Meet the Editor" zoom call, with no topic in mind, open mic style, discussing the Economy, Markets and Investing
You can RSVP here: https://lu.ma/adviia7aThe reason why huge shift of sentiment from these corporate CFOs?
The uncertainties created by Trump with tariff.
U.S. trade policy is the primary reason for the new economic downturn base case. It is now being cited as the top external business risk by CFOs, at 30%, followed by the related risks: inflation (25%) and consumer demand (20%), with the latest reading on consumer confidence in income, business and job prospects hitting a 12-year low.
You can read about the article here:
https://www.cnbc.com/2025/03/25/recession-is-coming-pessimistic-corporate-cfos-say-cnbc-survey.html
Signs the US consumers are at their last leg
Affirm announces JPMorgan Chase merchants can soon offer installment loans at checkout
“The demand for diverse payment options, flexibility, and seamless transactions from both merchants and their customers is at an all-time high,” Michael Lozanoff, global head of merchant services at J.P. Morgan Payments, said in the release.
Demand for “flexible” payment options is at all-time high…
This is translation for:
Consumers are broke, their credit cards are maxed out, and the only way to get them to keep buying is to offer payment plans for many things they no longer can afford.
We reached peak absurdity this week
From the announcement at DoorDash, a food delivery company.
Here’s the press release sharing the “exciting news”:
DoorDash Partners with Klarna to Offer US Customers Even More Convenience with Flexible Payments
In the press release, DoorDash touts the "benefits" for their customers:
Pay in 4 allows customers to pay in four equal interest-free installments
Pay Later allows customers to defer payments to a more convenient time, such as a date that aligns with their paycheck schedules
Imagine paying a $43 dinner delivery order over 4 payments?
We’re not talking about buying an expensive iPhone for $1,000 and splitting the payments over 12 months here.
This is Fourty-Three Dollars we’re talking about.
It’s not hard to imagine what will happen - Adam on X won the caption of the day:
That's the level of absurdity we're at at this stage of the economic cycle.
The scary part?
None of this so called "Buy Now, Pay Later" debt such as Affirm or Klarna are currently being reported to the credit report.
Meaning, when people are using these type of products, they are most certainly already maxed out or in a serious delinquent stage.
This also means, many consumers today are in worse shape than they were leading up to the previous recessions.
We are approaching a recession
The US economy is powered by consumer spending by about 70% of the GDP.
As consumers get stretched financially from the big increase in inflation after COVID, people are getting further and further behind trying to keep up with the increase in living expenses.
At some point, we will reach a point the consumers simply can't afford to buy even some of the basic things in life anymore.
Like the $43 dinner delivery needing to be split over 4 payments.
The economy powered by the US consumer is at the last leg.
When the US consumers finally give in, the economy will dip into a recession.
By some measures, we may already be in one.
People just don't do stuff like this during a healthy growing economy.
Prepare yourself and your portfolio for the upcoming recession
There are many things you can do to protect yourself and your portfolio.
If you're interested, I'm hosting a "Meet the Editor" zoom call tomorrow evening.
We can talk about anything when it comes to the economy & market.
Keep in mind this call is not to provide personal financial advice. It’s meant to be educational.
Want to chat about the upcoming recession?
Let's grab a drink and chat
Tomorrow, Wednesday 26th, I'm hosting a "Meet the Editor" zoom call, with no topic in mind, open mic style, discussing the Economy, Markets and Investing
You can RSVP here: https://lu.ma/adviia7aIf you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
March 25, 2025
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