- More CFOs were pessimistic about the outlook for their firm’s financial prospects in the fourth quarter than at any time since early 2020, as financial leaders grappled with economic headwinds, according to Deloitte’s latest CFO Signals quarterly survey.
- Forty-one percent of finance executives said they had gloomier outlooks for their own firms in the fourth quarter compared to the 37% in the third quarter, the survey found. That’s the highest level since the second quarter of 2020, when 65% of respondents indicated pessimistic outlooks.
- “In 4Q22, CFOs expressed the deepest level of pessimism toward their own companies’ financial prospects since the 2Q20 CFO Signals survey, a time when the COVID-19 pandemic was spreading throughout the world,” Steve Gallucci, national managing partner for the US CFO Program at Deloitte, wrote in an email.
Overall optimism for future economic conditions fell for four out five regions, while positive sentiment for the North American economy increased mildly for the quarter, according to the survey. Thirty-five percent of CFOs rate North America’s economy as “good or very good,” a small bump from the 33% who said the same in the previous quarter.
However, the number of CFOs expecting economic conditions in North America to improve in a year held flat as compared to the previous quarter, with just 29% of financial leaders expecting improvement.
CFOs today are also prioritizing cost management, which, alongside financial performance and growth, is one of the top three priorities for financial leaders moving into the next year, according to the survey. Fifty-two percent pointed to cost management as a key goal for 2023, while 50% said the same of financial performance and 38% pointed to growth.
CFOs’ lukewarm sentiments about the economy appear to be in line with similar attitudes by consumers, who appear to be pulling back on spending as we move into the holidays among continued pricing pressures. Retail and food sales declined 0.6% as compared to the previous month to $689.4 billion, with figures not adjusted for price changes, the U.S. Census Bureau said Thursday. Retail sales increased 6.5% year-over-year, according to the Census Bureau.
On Wednesday the Federal Reserve hiked interest rates by another half point and Fed officials now forecast they will increase rates to about 5.1% by the end of next year. This is revised from September projections which predicted they would raise the main rate to approximately 4.6%.
“It’s our judgment today that we’re not at a sufficiently restrictive policy stance yet, which is why we say that we would expect that ongoing hikes will be appropriate,” Fed Chair Jerome Powell said Wednesday.