What happens after inflation peaks?
Inflation might be losing momentum, with economic growth slowing and commodity prices falling, but what comes next is highly contested, with economists and analysts struggling to forecast how much price increases will ease, as well as labor market conditions that coincide with that transition. “We’re not likely to get out of this excess inflation situation without a recession,” former Treasury Secretary Larry Summers says. “We should anticipate something in the range of a couple of years with unemployment in the 6%-or-above range.”
Assessing the impact of the new minimum corporate tax
Starting in January, about 150 large US businesses are slated to pay at least 15% in taxes based on book or financial-statement income, leaving executives to assess how their firms might be affected. Companies will look to the US Treasury and IRS for guidance, said John Gimigliano, principal-in-charge of the federal tax legislative and regulatory services group at audit firm KPMG. “But at the moment, there are as many questions as we have answers,” Gimigliano noted.
Companies grappling with major FX challenges
Global firms have continually cited foreign exchange issues caused by the current strength of the dollar as a major headwind in recent earnings reports and forecasts. Laurence Capone, CFO of cloud-based SaaS firm Pipedrive, says one simple solution to reducing volatility is limiting the currencies the firm does business in, noting that Pipedrive primarily does business in two currencies, the euro and US dollar, despite having customers in more than 170 countries.
Where is the CPI headed?
The consumer price index in July was up 8.5% from a year earlier, which is lower than analysts expected and may indicate that the pace of inflation is slowing. The core consumer price index, which excludes volatile food and energy prices, was up 5.9% year over year.
Economic uncertainty has firms halting stock buybacks
Best Buy, Citigroup and JPMorgan Chase have called off stock buybacks as the market outlook darkens. Citi cites capital requirements for the hiatus, while JPMorgan CEO Jamie Dimon says the bank is preparing for “a broad range of economic environments.”
Jamie Dimon’s “storm clouds” warning
JPMorgan Chase CEO Jamie Dimon recently told the bank’s wealthy clients that “storm clouds” are ahead for the economy, a downgrade from his prior warning of an imminent “economic hurricane.” Dimon rated the likelihood of a soft landing from upheaval at about 10%, with chances of a “harder recession” or “something worse” around 20% to 30%.
The shift to automated accounts payable
The pandemic has been a major catalyst in digitizing business-to-business payments and other corporate finance functions, but some firms have lagged in the transition. Reachdesk CFO Vic Russo discusses the company’s shift to automated accounts payable, barriers to automation and the evolving priorities of a CFO.
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