Federal Reserve monetary policy, U.S. inflation and the labor market outlook remain the top concerns for chief financial officers (CFOs) over the next 12 months, according to a survey that ended on June 3. 28% of the CFOs surveyed said they are delaying, reducing or canceling investments due to uncertainty caused by the U.S. election.
That number (28%) is down from June 2016, when data from Duke University's Fuqua School of Business showed that about half of CFOs said they planned to reduce investment or hiring due to political uncertainty, the survey showed.
Fuqua, in conjunction with the Richmond and Atlanta Feds, surveys CFOs quarterly, asking them about their spending plans, economic outlook, key concerns and other topics, such as technology and its impact on business. Fuqua did not ask about the impact of political uncertainty during the 2020 presidential election.
The survey showed that CFO optimism was the same as in the first quarter of this year, but higher than last year. The 447 respondents said they expected year-over-year growth in U.S. gross domestic product (GDP) to reach 1.8% over the next 12 months, slightly lower than in previous quarters.
Executives are more optimistic about their own business prospects than the overall economy. "In a world where consumer confidence is declining, CFOs are not less optimistic," said John Graham, a finance professor at Duke University and the survey's academic director. "They're not super optimistic, but they're not super pessimistic either. CFOs have never forecast anything close to a recession, and they're continuing with the same view."
Despite this, CFOs expect cost pressures to continue, with 57% expecting their companies’ product prices to increase faster than pre-pandemic levels.
“While growth in unit costs, wages, and prices has slowed from its peak in 2021 and 2022, surveyed CFOs’ price expectations have not returned to pre-pandemic levels, suggesting that pricing pressures may be more persistent than initially thought,” Atlanta Fed survey director Daniel Weitz said in a statement.
CFOs also said they plan to automate tasks currently performed by employees, with the majority expecting artificial intelligence to play a key role. Respondents said automation improves product quality and output and reduces labor costs.
“CFOs say their companies are using AI to automate a range of tasks, from paying vendors, invoicing, purchasing, financial reporting to optimizing equipment utilization,” Graham said.
The article is forwarded from: Jinshi Data
