What We're Reading:

What We're Reading:

Why is Sudan so prone to civil war? Some see a link between Sudan's vast landscape, the many different groups that make up the country, and the repeated internal conflicts that have plagued the nation for decades. (NPR)

How Chile is shaping the global market for lithium, a vital component of EV batteries. The global boom in electric vehicle production has sent demand for lithium-ion batteries soaring. That’s turned Chile’s vast, lithium-containing salt flats into a vital national resource. (CNBC)

The US and allies could take action to counter China's 'economic coercion,' Treasury Secretary Janet Yellen says. In a press conference at the G7 meeting of Finance Ministers and Central Bank Governors on Thursday, Yellen said that the US had been mulling a counter measures against China's coercive economic policies for a while, potentially with the coordinated help of other countries. (Markets Insider)

One more time: China and Africa collaborating for a sustainable future. Africa now has a unique opportunity to capitalize on green raw materials, in response to the growing global demand for clean energy products, particularly from China, and the need to secure these materials' supply chain. (OEC)

UK economy: Cost of living and strikes weigh on growth. The U.K. grew only weakly in the first three months of the year with the economy hit by strikes, cost of living pressures and wet weather. (BBC)

Australian government approves first new coal mine since elected. The Australian government has approved a new coal mine for the first time since it was elected—on a climate action platform—last year. (BBC)

Fear grips Palestinians and Israelis, under fire for fourth day. Ceasefire talks under way as air strikes and rocket attacks this week kill 31 Palestinians in Gaza and a 70-year-old man in central Israel. (Aljazeera)

When does the COVID-19 pandemic end? The coronavirus is no longer in its emergency phase. But does that mean it's no longer a pandemic? (US News & World Report)

Wall Street stirs as debt ceiling brinksmanship mounts. The first alarm bells are starting to go off on Wall Street as brinkmanship over raising the U.S. government’s $31.4 trillion debt limit raises worries in financial markets. (AP)

As profit recession hits, Wall Street hopes it’s the bottom. Profits are falling for companies, and the only question is how much worse they will get. (AP)

Commerce Department starts process to fund tech hubs across the US with $500 million in grants. The Commerce Department on Friday is launching the application process for cities to receive a total of $500 million in grants to become technology hubs. (AP)

Global food prices rise for first time in a year. Global food prices rose in April for the first time in a year, according to new figures released Friday by the United Nations' food agency. (Axios)

The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council declined slightly to 42 in Q2 2023, down from 43 in the first quarter of the year. The Measure is still below a reading of 50, which suggests CEOs remain largely pessimistic about what’s ahead in the economy. (A reading below 50 reflects more negative than positive responses.) A total of 139 CEOs participated in the Q2 survey, which was fielded from April 10 through 24. 

CEOs are still pessimistic about the downturn to come. Similar to last quarter, 93% of CEOs still report they are preparing for a US recession over the next 12–18 months. Indeed, 87% believe the recession will be brief and shallow with limited global spillovers and 6% expect a deep US recession.

“After improving sharply to start the year, CEO confidence ticked down slightly in Q2 and remains firmly in negative territory,” said Dana M. Peterson, Chief Economist of The Conference Board. “CEOs’ view of current economic conditions continued to be negative, with 55% of CEOs still reporting general economic conditions are worse than they were six months ago. Meanwhile, future expectations deteriorated in Q2: 56% of CEOs expect general economic conditions to worsen over the next six months, while 40% expect worse conditions in their own industry—up from 48% and 33%, respectively, in Q1.”   

“The more things change, the more they stayed the same for CEOs in Q2,” said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. “Even as dramatic bank failures stoked fears of systemic breakdown, CEOs remain nearly unanimous in expecting a short and shallow US recession ahead, with just 6% preparing for a deeper downturn with major global spillovers. At the same time, CEO confidence remains appreciably higher than the depths seen last year. Meanwhile, leaders are acting to insulate themselves from the turmoil in US and EU banks: 62% of CEOs are examining their firms’ banking relationships, and large numbers are also reviewing their firms’ risk management practices and liquidity adequacy—as well as those of customers and suppliers.”

Current Conditions

CEOs’ assessment of general economic conditions was slightly better in Q2:

• 17% of CEOs said economic conditions were better compared to six months ago, slightly higher than 16% in Q1.
• 55% said conditions were worse or much worse in both Q1 and Q2.

CEOs were slightly less optimistic about conditions in their own industries to start Q2:

• 19% of CEOs reported that conditions in their industries were better compared to six months ago, down from 23%.
• 44% said conditions in their own industries were worse, slightly higher than 43% in Q1.

Future Conditions

CEOs’ expectations about the short-term economic outlook pulled back in Q2:

• 15% of CEOs said they expected economic conditions to improve over the next six months, down from 18%.
• 56% expected conditions to worsen, up from 48%.

CEOs’ expectations regarding short-term prospects in their own industries also deteriorated slightly:

• 25% of CEOs expect conditions in their own industry to improve over the next six months—slightly less than 26% last quarter.
• 40% expect conditions to worsen, up notably from 33% in Q1.

Employment, Recruiting, Wages and Capital Spending

• Employment: 33% of CEOs expect to expand their workforce over the next 12 months, down from 37% in Q1. And, while 20% expect a net reduction in their workforce, 46% expect little change.
• Hiring Qualified People: 52% of CEOs report some problems attracting qualified workers, somewhat improved compared to 57% in Q1.  Even so, 20% report difficulties that cut across the organization, rather than concentrated in a few key areas—up from 17% last quarter. Finally, 9% report no problem hiring, up from 7% in Q1.
• Wages: 75% of CEOs expect to increase wages by 3% or more over the next year, down slightly from 81% in Q4.
• Capital Spending: 27% of CEOs expect their capital budgets to increase over the next year, down from 30% last quarter.

US Recession Outlook

A vast—and still growing—consensus of CEOs is continuing to prepare for a brief and shallow US recession, with limited global spillover, over the next 12-18 months.

Bank Challenges

A majority of firms are examining their banking relationships in light of the current U.S. and EU banking sector turmoil as well as focusing on risk and adequacy of liquidity.

Federal Funds Rate

Most CEOs expect the Fed’s target rate to remain high or rise further in 2023.

Top Economic Factors for Monetary Policy:

CEOs continue to view inflation as by far the most important factor influencing monetary policy in 2023, followed by labor market tightness and the risk of further turmoil in the banking sector.

This year marks a long-awaited decline in semiconductor demand. But for many industries, the supply problems that began in the pandemic will continue to be business as usual.

A prime example is automotive. While global semiconductor sales are projected to drop to $623 billion in 2023 from $639 billion last year, according to analysis by Oliver Wyman, demand in that sector just keeps rising. With a three to five times increase in chip content per car—driven by electrification, functionality and increased penetration of Advanced Driver Assistance Systems (ADAS)—sales are expected to jump to $90 billion in 2025 from $61 billion in 2022.

That’s a hard pill to swallow for automotive original equipment manufacturers (OEMs), which suffered a combined production loss of approximately 13 million cars in 2021 and 2022 stemming from semiconductor supply chain issues. The industry is hardly alone: Most of the problems are with trailing-edge microcontrollers, which a wide range of businesses need. Over the last five years chip makers have invested far more heavily in leading-edge semiconductors for which they can charge higher prices, and now will require two or three years to build out trailing-edge capacity. In the meantime, automakers and other companies might lose billions of dollars in profits due to shortages of trailing-edge semiconductors.

Still, the experience has provided valuable lessons for how automotive OEMs and other companies work together with semiconductor makers. Moving forward, they need to turn what they’ve learned into action if they hope to avoid the same kind of shortfalls from occurring in the future. 

Managing semiconductor supply chain risks

For OEMs, an effective plan will have short-, medium- and long-term components. First, to address immediate challenges, businesses should launch an internal task force charged with creating transparency around semiconductor supply chains. It’s a continuous process of identifying potential risks, as well as preparing measures—anything from spot market purchases to using alternative components—to enable fast reaction times. Given that shortages often come up with little advance notice, the task force can benefit from meeting as frequently as every day if necessary. For the most pressing issues, the board may need to become involved as well.

Looking ahead to medium-term solutions, companies like automotive OEMs and tier-1 suppliers must focus on managing the existing supply chain for resilience. That means more formally defining their strategies for avoiding and mitigating risk, including how they prepare for crises. First, the organizations should identify their semiconductor demand based on their production schedule, and then pass that information through the supply chain. Next, they must help put semiconductor manufacturers in a better position to meet that demand by communicating it directly to them. 

Measures that set up the supply chain for long-term resilience and minimal risk are important, but also costly. With this balance in mind, organizations should carefully weigh their approach to handling suppliers, partners, governance and other issues. There is a large breadth of options worth reviewing for the most important semiconductors, such as increasing inventory and stock levels, moving to dual sourcing and offering incentives to suppliers.

How chip makers can help meet demand

Semiconductor companies also share in the responsibility for preventing shortages. It’s vital that they increase collaboration with automotive OEMs and any other companies in industries that are becoming more important customers. It starts with encouraging improved communication about future demand. Ultimately chip makers need to work hand-in-hand with such clients to align buildout and investment plans, similar to the relationships they’ve long had with tech companies.

Of course, none of these are one-off steps. Translating the learnings from two years of supply chain woes into organizational capabilities takes persistent effort. Over time, smart businesses will strive to make those capabilities permanent.

Felix Diehlmann also contributed to this article. 

This article originally appeared on Oliver Wyman.

Each time we accomplish something—big or small—we see a version of ourselves that we didn’t yet know existed. It is inside of this space, between who we were and who we just realized through this achievement that we can become, that the burden of our potential comes to rest upon our shoulders. It’s exciting, it’s amazing, it’s humbling. It’s wonderful. But it’s also stressful, anxiety-provoking, identity-shifting and impostor syndrome-rendering. It’s hell.

t’s wonderful and it’s hell. It’s Wonderhell.

It’s wonderful because we see what more we can become. But it’s hell because we know that the road to get there is most certainly lined with possibilities for failure.

Let’s not fake it ’til we make it

The fear of failure limits our ability to determine who we are when we are at our very best—to groove the pattern as a leader when we are that best self. If we try to prevent failure by acting like we know what we’re doing, we will groove that pattern instead: of acting like we know what we are doing. We won’t actually learn how to do it. Nor will we learn why and how it works—or whether or not we actually find that work personally meaningful. 

You may think that if you keep faking it, you can never fail. But this setup forces you to speak using other people’s voices, and to act using other people’s mannerisms. You try to control for everything and end up controlling nothing. Rather than holding more tightly to the reins, you need to allow space for trying out new things, for failure and feedback. This approach will offer greater insight into the areas where you are in consonance, so you can focus on what really matters and gain traction over those things. 

Re-categorize failure from finale to fulcrum

We teach our students that failure is part of the process. Each new school year, they repeat the process of adopting a beginner’s mindset. They figure out algebra, and then it’s time for geometry. They figure out geometry, and then it’s time for trigonometry. Then, they figure out trigonometry, and—hold the phone—calculus is in the house. Over and over, year after year, our children learn that this beginner’s mindset is not just okay. It’s necessary. It’s how they grow.

Some of the most successful people on our planet credit these moments in school for helping them do what had never been done before. Sergey Brin and Larry Page, co-founders of Google, are both children of academics, yet when asked about how this helped them become successful start-up entrepreneurs, they point instead to their Montessori School training, where there were no failures or dead ends—just new questions to ask. “Part of that training was being self-motivated,” Page explains, “questioning what’s going on in the world, doing things a little bit different.”

Yet somewhere along the line, we adults forget this lesson. We get hired to do something because, at one point, we demonstrated competence in that thing. We get paid, praised and even promoted for it. Then time passes, and we become so afraid that if we try something else, we might fail. We think failure is final, but we should remember that failure is fulcrum: the place where we learn and grow and innovate and iterate. 

Take a lesson from the pros

Serena Williams is one of the fiercest competitors ever to grace the tennis court (or any athletic stage, for that matter), and yet in practice, she doesn’t spend all her time working on what she has perfected. She does some of that, of course, to groove the pattern and make sure that certain shots were nor mere accidents. But spending more time being uncomfortable—fixing what’s not working, going deep into the pain cave and facing her failures—ensures that she can always come out stronger. 

Is the fear of failure, the agony of the work and the uncertainty of the outcome any less exquisite for Serena as it is for you or me? I doubt it. To get better, we each have to dance with the demons that reside at the darkest depths of our personal pain caves, screaming at us to slow down, to give in, to stop. While those caves might look different for each of us, the exquisite, local, personal pain feels exactly the same.

Author and executive coach Laura Gassner Otting inspires people to push past the doubt and indecision that keep great ideas in limbo by helping audiences think bigger and accept greater challenges and delivers strategic thinking across the start-up, corporate, nonprofit, political and philanthropic landscapes. Gassner Otting has written three books, including “Wonderhell: Why Success Doesn’t Feel Like It Should …What to Do About It,” “Limitless: How To Ignore Everybody, Carve Your Own Path, and Live Your Best Life,” and “Mission-Drive: Moving From Profit to Purpose.”

This article originally appeared on SmartBrief.

Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate