As the U.S. prepares for the next administration, CFO confidence in the economy is steadily increasing. This optimism reflects a growing anticipation of new tax policies, potential restructuring of the federal government, and shifts in regulatory frameworks. Across industries, finance leaders are taking proactive steps to assess how these anticipated changes will affect their operations and are strategically planning.
While times of political and economic transition are often associated with uncertainty, many CFOs appear to be viewing the current landscape as an opportunity for growth and adaptation. A recent CFO survey conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta captures this sentiment, showing a significant boost in CFO confidence.
Optimism on the Rise
The survey revealed that CFO optimism about the economy rose to 65.9 out of 100, marking a five-point increase from the third-quarter report. This level of confidence signals growing enthusiasm for the direction of the economy, with many respondents attributing the boost to the results of the recent election. While challenges remain, this uptick in optimism is a strong indicator of resilience within the business community.
Shifting Concerns: Labor, Inflation, and Political Uncertainty
With the election now behind us, the survey also highlights a notable shift in CFO concerns. Worries about monetary policy have eased considerably, reflecting increased clarity in this area. However, labor quality and availability have emerged as the most pressing issue for CFOs, followed closely by inflation and monetary policy.
Interestingly, concerns about the political climate have risen sharply. This shift likely reflects uncertainties surrounding the transition period leading up to Inauguration Day, as well as questions about how the new administration’s early policies might impact businesses. This focus on political uncertainty underscores the critical role of clear communication and strategic planning during times of change.
Trade and Tariffs: A Growing Concern
In the realm of trade, plans to implement tariffs have contributed to a noticeable rise in CFO concerns. Although trade and tariffs remain secondary issues overall, the share of mentions regarding these topics increased by 2.6 points in the latest survey. Experts predict this trend will continue, with trade policy likely to feature prominently in the upcoming Q1 2025 survey results.
Positive Performance Expectations for 2025
Despite these challenges, CFOs remain optimistic about their organizations’ performance in the coming year. Revenue expectations have increased slightly, rising from 4.9 percent to 5.6 percent quarter-over-quarter. This modest improvement is a positive sign, particularly given the slight decline in the percentage of CFOs reporting increased spending outside of capital investments—from 44.6 percent in Q3 to 41 percent in the latest survey.
Looking ahead to 2025, CFOs expect to see growth in revenue and pricing, though they anticipate declines in unit costs, employment, and average wages. The expected drop in wages is particularly surprising, given the Federal Reserve and business leaders’ emphasis on wage growth as a tool to mitigate inflation’s impact on consumers. This divergence highlights the complex dynamics CFOs must navigate in balancing cost management with workforce needs.
Confidence in the Stock Market
Another notable highlight from the survey is the growing confidence in the U.S. stock market. CFOs predict that the record-breaking performance of the S&P 500 will continue, with an anticipated annual return of 7.1 percent over the next 12 months. Their forecasts include a best-case scenario of 13.4 percent returns and a worst-case scenario of a 2.7 percent decline, signaling a broad expectation of continued market stability.
A Balancing Act for Business Leaders
As we move into 2025, CFOs face a dynamic and evolving landscape. Balancing optimism about economic growth with the challenges of labor shortages, political uncertainty, and shifting trade policies will require careful planning and strategic agility. For finance leaders, the ability to adapt to these changes will be key to sustaining growth and navigating the opportunities and risks that lie ahead.
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