CFOs Say Normal Economic Activity Returns in the Third Quarter of 2020

Half of all U.S. Chief Financial Officers (CFOs) surveyed by CFO Research, said they expect a "V-shaped" recovery or a return to normal economic activity in the third quarter of 2020. Approximately 40 percent of CFOs projected a longer period of slower economic activity, extending into 2021, signaling a "U-shaped" recovery. Only 9 percent of respondents expect a sustained period of recession, with economic activity not picking up until 2022.


The survey, which was conducted nationwide by CFO Research from March 26–April 2, was based on responses from senior finance executives, many from within Silicon Valley and the San Francisco Bay Area.

"While every CFO estimates a drop in first-quarter sales as a result of the economic impact from COVID-19, the vast majority are optimistic the economy will return to normal by next year," said Vincent Ryan, Editor-in-Chief of CFO. "To address cash flow concerns — a top issue for CFOs — they are taking immediate action, from slowing investments to tapping credit lines to weather the crisis. And although they have a positive outlook, many are making near-term changes in headcount."


More than half (53 percent) of finance executives said they estimated a first-quarter drop of between 1 percent and 20 percent. About 22 percent of finance executives indicated the hit to sales would be larger — a falloff of between 21 percent and 50 percent. And 17 percent of respondents expected a drop of 41 percent or more.

Nearly half (49 percent) of the finance executives surveyed indicated that their organization was "scaling back" or delaying investments while 47 percent were working on improving their liquidity positions. One-fifth (20 percent) of respondents indicated they were shutting down or idling some operations.


About one-third (35 percent) of respondents indicated that they were laying off or furloughing employees. Most of those respondents, however, said they didn't know how many employees would be affected by the economic fallout. More than one-third (36 percent) said they planned to cut 15 percent or less of their employee base. Less than one-fifth (17 percent) of respondents said layoffs would affect 20 percent or more of their workforce.

"CFOs, as stewards of the company's assets, have to be prepared for the downside scenario. Yet, they aren't losing sight of the human cost of this global pandemic, protecting employees and conserving cash to keep the bulk of their people employed," added Ryan.


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