Optimism on the rise among large-company CFOs, according to survey

CFOs haven’t felt this good about the economy in more than a year.

Fifty-seven percent of North American CFOs rate current economic conditions as good or very good — up from 34% last quarter — according to Deloitte’s 2023 Q3 CFO Signals survey. That’s the highest mark since the first quarter of last year, when 64% of CFOs were positive about the economy. CFOs are also optimistic about their own companies’ financial prospects and their expectations for year-over-year growth.

The North American survey, conducted in August, used responses from 116 CFOs — about three-fourths from public companies. In all, 85% of the companies have annual revenue above $1 billion, including 42% with revenue greater than $5 billion.

The recent Business and Industry Economic Outlook Survey by AICPA & CIMA, together as the Association of International Certified Professional Accountants, also showed rising sentiment. Forty-five percent of CPA decision-makers were optimistic about their organization and 29% were optimistic about the U.S. economy — both increases over the previous quarter. That survey uses responses mainly from private companies, with just 12% having revenue above $1 billion.

In the Deloitte survey, CFOs are upbeat about their own organizations’ prospects. Their “own-company net optimism” (the percentage of CFOs citing rising optimism for their companies’ prospects minus the percentage citing falling optimism) was +22, up from +6 last quarter.

Regarding year-over-year growth, CFOs raised their expectations for revenue, earnings, and domestic hiring compared to last quarter and lowered them for dividends, capital investment, and domestic wages/salaries. Their expectations for growth in earnings jumped to 8.3% from 4.4%.

On a less positive note, more than half of CFOs (56%) consider U.S. equity markets overvalued — up from 39% last quarter. Most CFOs view debt and equity financing as unattractive and say now is not a good time to be taking greater risks. High interest rates are likely tempering their views on financing, according to the survey.

Experimenting with generative AI

The survey also revealed interest in the potential uses and benefits of generative artificial intelligence (GenAI). Forty-two percent of CFOs’ organizations are experimenting with the technology, and 15% are incorporating into their business strategy.

About one-fourth of CFOs said GenAI is important or very important to achieving their business strategy, and 42% said the technology is not important.

CFOs, like many leaders, have concerns about adopting and deploying the technology. The top concerns are impact on risk and internal controls (57%), data infrastructure and technology needs (52%), investment requirements (51%), and governance requirements (49%).

The biggest obstacle in adopting and deploying GenAI, according to 63% of CFOs, was obtaining the necessary talent resources and capabilities. That was followed by data and technology resources (49%), risk and governance concerns (45%), and competing priorities (42%).

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