The quarterly earnings reporting season has delivered a clear shift in tone, even accounting for the idea that CEOs and CFOs like to manage expectations and want to avoid having to deliver a nasty surprise in three months. A lot of questions about early 2024 forecasts have been quickly swatted down and executive teams have been eager to point out that they are being careful because a lot of their clients — corporate and consumer — are more reluctant to spend. Nearly half of CEOs expect economic conditions to worsen further and Wednesday’s Manufacturing PMI reading won’t change their minds.

The big question: Will consumers’ and businesses’ caution translate this time into a broad downturn or create another mild and temporary downshift? Diane Swonk at KPMG thinks neither: Her team is expecting ’24 GDP growth to consistently be around 1%. Businesses playing it safe will contribute to that tepid environment.

— Geert De Lombaerde