The latest CFO Survey, conducted by Duke University’s Fuqua School of Business in collaboration with the Federal Reserve Banks of Richmond and Atlanta, reveals a cautiously optimistic outlook among financial executives as they plan for the final quarter of 2024. Despite lingering uncertainties regarding the overall health of the economy and the political landscape, particularly with the upcoming election, CFOs anticipate continued growth in both employment and revenue.
Optimism and economic growth
The survey, which closed on September 6, involved about 450 financial executives who reported minimal changes in their optimism about the U.S. economy and their own firms’ prospects. Sonya Ravindranath Waddell, a vice president and economist at the Federal Reserve Bank of Richmond, emphasized that firms are expecting a “soft landing.” This reflects a belief that, despite economic headwinds, there will be manageable growth.
Investment plans
More than one-third of the firms surveyed indicated plans to invest in structures in the next six months, while about two-thirds intend to invest in equipment. These investments largely focus on repairing or replacing existing infrastructure. However, firms are also looking to enhance capacity and introduce new products or services, suggesting a proactive stance toward growth.
Challenges and concerns
Despite the optimism, about 30% of firms reported that they have postponed, scaled down, or canceled investment plans due to uncertainties surrounding the upcoming election. In addition to political concerns, financial executives cited the overall health of the economy and future demand as significant worries.
Access to financing remains a critical issue, especially for smaller firms. Approximately a quarter of respondents expressed that the availability or cost of financing could limit their capital spending in the next year. Interestingly, firms that reported being financially constrained indicated they would invest nearly 40% more on capital if these constraints were alleviated, underscoring a strong underlying demand for growth and investment potential.
Price growth expectations
CFOs also noted a normalization in expectations for price growth, which may indicate a stabilizing economic environment moving forward. This shift suggests that firms are adjusting to changing economic conditions and are optimistic about returning to more typical pricing scenarios.
Conclusion
Overall, the CFO Survey highlights a complex but hopeful outlook among financial executives. While there is strong intent to invest and grow, especially in infrastructure and capacity, concerns about economic and political uncertainties remain. The willingness of firms to increase investments significantly if financial constraints are lifted further underscores their commitment to navigating these challenges and pursuing growth opportunities.
