Survey Says: Crunchbase News Readers Preparing For Recession In 2023

A recession is more likely than not in 2023, Crunchbase News readers surveyed predict, though they’re much less pessimistic about the prospects at their own companies.

Still, most say their companies are cutting costs, and headcount is the No. 1 expenditure on the chopping block.

Recession fears rise

More than 82% of the 294 readers who responded to our recent survey put better-than-even odds on a global recession in 2023.

More than half of those who responded to our survey are in the tech or software industries, while the next largest share (10%) are in banking or finance.

In comments, several readers said they believe the world economy is already in a downturn — maybe even one that started in early 2022.

Another noted that this time feels different: “This is such a weird-ass economic period that we are in that it can’t (currently) be defined by traditional recession attributes,” the reader wrote. “When it all shakes out, this time period will need to be the standard bearer of a new category — one that is highlighted by uneven highs and lows that are felt differently across the globe.”

Yet others feel like investors are overreacting. “I think there’s a big disconnect between where investors think the economy is going and where everyone else thinks it’s going,” said one reader who identified as an owner or executive in the tech industry. “Investors are running for the hills. Everyone else is being cautious. It’s beyond bizarre.”

Companies cut costs, starting with jobs

A bit under half — 40.5% — of respondents said their companies are cutting costs. Another third said spending is staying about the same. Only 17.7% said their companies are increasing costs.

Among those businesses cutting costs, the biggest expenditure on the chopping block is headcount: More than 58% said their companies are conducting layoffs. That’s not surprising — at last count, U.S. tech employers have already slashed at least 90,000 jobs so far this year, according to a Crunchbase News tally.

Other big areas where companies are cutting costs include employee travel — more than half of readers surveyed said their businesses are slashing travel budgets — professional services, real estate costs, and software and other digital services.

Don’t expect a new company mug this year, either. Almost a third of readers said their companies are cutting back on free swag for employees.

“We are looking at the return we obtain from each discretionary spend to ensure we get value from it and to determine if there are other options that are less expensive but deliver the same or equivalent returns,” wrote a reader who identified as an executive, founder or business owner in the tech industry. “It is not the cost we are now looking at but the value proposition associated with each discretionary spend item.”

Optimism abounds at company level

Still, readers are much more upbeat about their own companies than they are about the global economy at large. While more than 8 out of 10 readers surveyed say a global recession is likely in 2023, more than 1 in 6 still rate their company’s financial prospects next year on the optimistic side.

“All of this doom and gloom is getting lumped into one big overarching theme — the reality is that given how tight the labor market is for skilled professionals, there will no doubt continue to be ‘winners’ in what will likely be a soft 2023 overall,” wrote one reader, who identified as working in sales in the professional services industry. “And given the tightness of the market, the moment the Fed decides to slow/halt their increases, the growth engines will no doubt be fighting to get ahead of the pack.”

Job hopping declines as purse strings tighten

Still, it seems the job market has swung back in employers’ favor. Fewer than 2 in 10 readers surveyed said they’re extremely likely to seek out a new role in 2023, while almost 40% overwhelmingly expect to stay in their current position.

Unsurprisingly, readers are also more cautious about their personal finances. Half of those surveyed said they’re cutting back on personal spending.

One reader noted that they’re “waiting to buy a new home until the housing market corrects.”

Still, a full third of survey respondents said they’re not reining in household or personal expenses.

“I think consumer spending will stay the same for 2023,” said another reader. “However, people will tighten up their budgeting.”

What else is on readers’ minds

• Glass half full: “A down market will be an up year for us. Startups and small business need capital. As VCs pull back and bank loans become less appealing, companies will turn online for access to capital from their customers, friends, family, and followers. While average investor check sizes will be smaller, demand for capital among issuers is poised to be the greatest ever. We also predict that investors who want liquidity from their private company investments will leverage secondary trading platforms. Discounts are to be expected but this will bring into focus the ability for investors with unrestricted securities to find liquidity elsewhere without having to wait for a merger, sale, or IPO.”

— Executive/owner/founder in banking/finance

• Recession: Not if, but how big: “The big unknown is the length and depth of the pending recession. Consumer spending is now back on the consumer to fund, which will further stall GDP.”

— CEO coach/adviser

• Staying alive: “I treat every year like it’s a recession already. This should have little impact on business for truly lean operations.”

— Executive/owner/founder in software/tech

• Keep calm and carry on: “Venture investors are running for the hills screaming about the impending doom (I’m looking at you Sequoia). The rest of us are standing around wondering if they’re geniuses or idiots. In the meantime, we’re just getting on with business.”

— Executive/owner/founder in software/tech

Methodology

Results are from a survey of Crunchbase News readers conducted between Nov. 29 and Dec. 13, 2022, in which 294 readers responded. Readers self-identified their industries and roles and were not required to answer all questions to complete the survey.

Illustration: Dom Guzman

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