The latest Deloitte CFO Signals™ survey reveals a cautious outlook from leading CFOs of U.S. and Canada companies, driven by economic uncertainty, inflationary pressures, and the upcoming U.S. election. CFOs, representing firms with revenues exceeding $1 billion, expressed tempered optimism about the near-term future while highlighting key risks and priorities for their organizations.
Pessimism About Regional Economies
The assessment of economic conditions paints a rather bleak picture. Only 14 percent of CFOs rated the current North American economy as favorable, with a slightly higher percentage (19 percent) expecting improvement over the next year. Other regions fared worse, with only 5 percent of CFOs saying Europe’s economy is currently in good shape, and 12 percent expressing confidence in Asia (excluding China). South America saw even lower ratings, with just 8 percent of respondents viewing its economy positively.
Despite slight optimism for North America’s future, CFOs remain generally unconvinced that global conditions will substantially improve in the short term. Only 19 percent believe the North American economy will recover in the next year, while a mere 9 percent hold similar hope for South America.
Inflation and Technology Lead Risk Concerns
When asked about their top external and internal risks, inflation emerged as CFOs’ most pressing concern, cited by 57 percent of respondents. Economic conditions (54 percent) and geopolitical uncertainty (52 percent) followed closely. Internally, the biggest worry for CFOs remains technological transformation (49 percent), signaling an ongoing focus on adapting to digital change and managing the complexities of emerging technologies like Generative AI.
Risk Appetite Diminishes
CFOs’ willingness to take on greater risk has significantly dropped. Just 12 percent feel now is a good time to increase risk exposure, a steep decline from 26 percent in the previous quarter and well below the two-year average of 32 percent. This risk aversion is linked to the upcoming U.S. election, with 58 percent of CFOs stating that its outcome will have substantial consequences for their organizations.
A Focus on Workforce Issues and Financing Options
A notable 33 percent of CFOs said workforce challenges should be a top priority for the federal government, underscoring the need to address labor shortages, wage inflation, and skill gaps.
On the financing front, CFOs are showing renewed interest in both debt and equity financing, with 55 percent finding debt financing attractive and 52 percent seeing value in equity. These levels are the highest recorded in over two years, reflecting increased confidence in capital markets as interest rate cuts loom.
Moderate Growth Expectations
CFOs remain optimistic about growth in key business metrics, forecasting year-over-year revenue growth of 2.4 percent and earnings growth of 2.1 percent in the next 12 months. Capital investment is expected to rise by 3.4 percent, while dividends are projected to grow by 1.5 percent. However, domestic hiring growth expectations have declined, reflecting ongoing concerns about the labor market.
Election Concerns Cloud the Future
As the U.S. election approaches, CFOs are bracing for its impact. More than half (58 percent) believe the outcome will significantly affect their organizations, influencing everything from regulatory changes to potential shifts in tax policies. For now, CFOs remain cautiously optimistic about financing opportunities but are hesitant to embrace greater risk until the political landscape becomes clearer.
Steve Gallucci, national managing partner of Deloitte’s U.S. CFO Program, said, “With interest rate cuts on the horizon, CFOs are evaluating financing options as more attractive for the first time since early 2022. Still, their optimism could be dampened by the uncertainty around the current election, which has perhaps tempered their appetite to take risks."
As the business community awaits both the election results and potential shifts in monetary policy, CFOs will need to balance caution with seizing emerging opportunities, ensuring their companies are prepared for whatever challenges lie ahead in 2025.
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