Good morning.
The Fed’s modest rate increase yesterday has sparked hopes that the U.S. can get inflation back to 2% without a serious recession. Count me as skeptical. Wage inflation is still running close to 5%, and there’s not a lot of historical evidence to suggest you can beat that back without an economic slowdown.
But what’s interesting to me is that while businesses are clearly bracing for recession—a PwC survey I reported on recently found 73% of CEOs expecting a decline—they seem even more focused on the need for long-term transformation of their businesses, driven either by new technology or by the demands of the energy transition or by a retooling of their supply chains.
The question that raises is: How do you batten down for a recession and tool up for transformation, both at the same time? That was a topic we explored at virtual meeting of the Fortune CEO Initiative yesterday, sponsored by PwC. A few excerpts:
“I've been through cycle after cycle of both technological change and economic change. And my philosophy has always been that we have to always look to the long term. Because the one thing I know is that over 10 years, travel will pretty much grow a little bit faster than GDP. So I have to always say, ‘Let's not worry too much about the short term. Let's make sure that we're going for the long term.’”
—Glen Fogel, CEO, Booking Holdings
“My advice is: Get your company fit for growth. Do all the cost restructuring that needs to be done, then reinvest in growth. And that growth needs to be powered by technology. That will be the future.”
—Mohamed Kande, global advisory lead, PwC
“If there is one thing we've learned during the pandemic, it is that the only way to be agile and to react every day…is really to empower teams on the front line. And that's really the one theme that we have been consistently developing over the last years, and increasingly accelerating in the last 36 months.”
—Alexis Garcin, CEO, Michelin North America
“The thing that I always, always try to overemphasize to my people is: Please, don't get distracted by headlines. Don't get distracted by noise. Focus on the North Star. Ultimately…the day-to-day debates about crypto shouldn't take away from the long-term conviction we have around the asset class.”
—Michael Sonnenshein, CEO, Grayscale
And speaking of crypto, we at Fortune are teaming up with Mark Wahlberg’s production company, Unrealistic Ideas, to tell the epic story of the crypto-rivalry between Sam Bankman-Fried and Changpeng Zhao that led to the monster meltdown of FTX. So stay tuned. This saga is better than fiction.
Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
