A recent survey from Grant Thornton LLP revealed that chief financial officers (CFOs) are more optimistic about the U.S. economy than they’ve been in nearly three years.
The survey revealed significant shifts in the sentiment of CFOs towards the U.S. economy. Notably, 34 percent of CFOs express "very optimistic" views, marking an 11-quarter high in the survey, while only 12 percent report feeling pessimistic, representing an 11-quarter low.
Jim Wittmer, Grant Thornton’s national managing partner for Tax Growth, attributes this optimism to the potential lowering of interest rates by the Federal Reserve (although the timing of this is currently more uncertain), which has positively impacted clients' outlooks when the survey was taken. Despite this positive sentiment, challenges lie ahead.
Rising operational costs remain a concern, with 55 percent of respondents prioritizing cost optimization. Additionally, 50 percent anticipate an increase in operational costs over the next year, driven by inflationary factors such as rising global shipping expenses. However, the uptick in facilities spending, particularly in warehouse construction, reflects broader economic trends such as nearshoring in manufacturing and the expansion of e-commerce logistics.
To address these challenges, CFOs are turning to automation, data analytics, and artificial intelligence (AI) to enhance efficiency and control costs. Notably, there has been an increase in the utilization of generative AI, with 47 percent of respondents adopting this technology.
Despite cost-related concerns, CFOs remain optimistic about future growth, with 71 percent projecting an increase in net profits over the next 12 months. To capitalize on economic conditions, CFOs plan to increase investment in technology, sales, and marketing. Additionally, there is a growing emphasis on technology governance, with a record-high 64 percent of respondents establishing acceptable use policies for generative AI.
Looking ahead, CFOs are focused on optimizing monthly close processes to obtain more timely and actionable data. While access to capital remains relatively unhindered, funding has become more expensive, prompting CFOs to explore diverse funding sources, including bank borrowing, private equity, and government incentives such as the Inflation Reduction Act tax incentives.
Overall, the survey highlights CFOs' adaptive strategies in response to evolving economic conditions, emphasizing the importance of innovation and prudent financial management in navigating uncertainty and driving growth.
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