According to a recent CFO survey made public by the Federal Reserve Bank of Richmond, Virginia, chief financial officers (CFOs) in the United States are feeling more optimistic about the economy in the fourth quarter. Notably, CFOs' expectations for job growth were characterized as "solid" for the coming period.
The report indicates that CFOs' outlook for the overall US economy improved, with the average optimism rating rising to 58.0 on a scale of zero to 100, up from 56.2 in the third quarter. CFOs were also positive about their own firms' prospects, giving them an average rating of 67.3 in this quarter, slightly down from 67.8 in the previous quarter.
While optimism is on the rise, employment and revenue expectations for 2024 remain solid, according to the survey:
- Median expected employment growth for next year is forecasted at 2.7%, up from the third-quarter projection of 2.2%.
- Median revenue growth is expected to remain steady at 5% for the upcoming year.
- Median price and unit cost growth are anticipated to slow from 5% for both this year to 3% and 4%, respectively, in 2024.
- Expectations for compensation growth also remain above what firms consider normal.
The report also highlights some signs of caution, such as the shrinking share of firms reporting increased spending and a significant percentage of respondent firms having existing debt, much of which is expected to mature in the next few years. For firms intending to roll over their debt, higher interest costs are anticipated, suggesting potential headwinds to economic growth in the coming year.
Despite these concerns, respondents' average expectation for GDP growth over the next four quarters increased to 1.7%, up from 1.3% in the third-quarter survey.
The CFO Survey is based on a panel with 2,100 members as of December 1 and is a collaboration between the Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business. The positive outlook from CFOs signals growing confidence in the economic trajectory, with potential implications for business investment and expansion in the near future.
