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Everything’s coming up Milhouse-ish.
CFOs have a brighter outlook about their own companies and the larger US economy in 2024, according to the latest CFO Survey, a collaboration between the Richmond and Atlanta Federal Reserve Banks and Duke University. The survey measured CFO sentiment between August 21 and September 8 of this year.
Beyond growing optimism, the survey hints at other significant shifts in financial decision-makers’ general outlook. In recent quarters, CFOs were most concerned about labor availability.
In the latest quarter, CFOs said monetary policy was their top business concern, followed by "labor quality and availability, inflation, and weak demand." That’s notable: It marks the first time in at least a decade that monetary policy took the top slot, according to a statement from the Richmond Fed.
And from the survey results, it’s clear that interest rates are impacting spending. Around 40 percent of CFOs said their companies cut back on spending due to high interest rates.
If interest rates were to stay at current levels for another year, the share of companies that’d pull back on spending would grow to around 50 percent, according to the survey. Interest rates aren’t the only factor causing firms to pull back on spending, though. “Economic uncertainty, weaker demand, and hiring difficulties” all ranked high as well.
But by and large, the survey was full of bright spots. CFOs “expect employment growth to increase” in 2024, and price and unit cost growth are expected to slow next year.
Everyone’s been waiting for word of a soft landing, and this survey isn’t a bad place to start. “Overall, the weak (but still positive) growth in 2023, followed by improved prospects in 2024, suggests that policymakers may yet pull off a soft landing for the US economy,” John Graham, a Duke finance professor and director of the survey, said in a statement.