Despite continuing concern over the state of the economy, plus added unknowns pertaining to the upcoming U.S. elections, CFOs remain optimistic about their own company’s economic trajectory.
Respondents to the latest quarterly edition of The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, on average, said they expected to see revenue growth of 4.9% this year and 7.1% in 2025.
Pricing was expected to gain by 3.5% in 2024 and 4.0% in 2025, according to the approximately 450 financial executives who were polled.
“In spite of uncertainty in the economy, firms still expect a soft landing,” said Sonya Ravindranath Waddell, vice president and economist with the Federal Reserve Bank of Richmond. “[They] continue to invest in the infrastructure that they need not just to continue operations, but to increase capacity and offer new products.
But there are headwinds. For example, about a quarter of the survey respondents said access to or the cost of financing would constrain their capital spending in the next 12 months. Naturally, that sentiment was far more prominent among smaller companies.
On average, the financially constrained companies would plan to invest almost 40% more on capital relative to their current spending plan, if the constraints were removed.
Still, more than a third of the participants said their companies plan to invest in physical structures in the next six months, and two-thirds said they intend to invest in equipment. Most reported that they’re investing to repair or replace existing infrastructure.
In terms of employment, the near future is a mixed bag. While those surveyed said they expect 5.6% full-time employment growth by the end of this year, they anticipate just 3.2% growth in 2025. However, total wage expenses are expected to rise about the same percentage in both years.
When asked about their views of the economy, finance executives said for the fifth consecutive quarter that their leading concern was monetary policy. Uncertainty over interest rates is clearly on their mind.
The next greatest concern was demand/sales/revenue, followed by labor quality/availability, overall health of the economy and cost pressure/inflation.
Respondents’ expected real GDP growth of 1.9% over the next four quarters was the same as in the prior quarter’s survey.
