CFOs of U.S. companies have made a turn towards the optimistic this quarter, overwhelmingly expressing belief their businesses will largely recover from this year's challenges in 2021, a survey of 300 CFOs from Duke University Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta found.
"CFOs are seeing over the cloud of the pandemic," Duke Fuqua finance professor John Graham, who oversaw the survey, told the Wall Street Journal. "Some of the growth that we will see next year will be coming from the low base in 2020."
- The survey, which took place from November 30 to December 11, 2020, found CFOs rated their average optimism at 71 on a scale of 0 to 100 — a slight increase from last quarter's 70.4. They rated their optimism towards the overall U.S. economy as 61.6.
"CFOs are looking past the pandemic and are reasonably optimistic about 2021," Graham said in a statement. "However, they note several important risks and uncertainties, including a shift from concerns of low demand to issues such as labor quality, tax policy and increased automation."
CFOs' optimism is rooted in the many indicators that the worst impacts of the virus will be largely in the rearview mirror by this time next year.
Despite the recent substantial uptick in coronavirus cases, the U.S. economy has had a strong end of year. It has recovered "about two-thirds of the ground it lost" in the spring and summer, according to the Journal.
Two weeks ago, a Deloitte survey found nearly 7 in 10 North American CFOs said they expect a vaccine to "bolster the economy by mid-2021." Since then, two major vaccines, Pfizer and Moderna, have been cleared by the FDA, with a third from Johnson & Johnson set to follow suit soon.
Any delays to the vaccine progress could make CFOs' predictions over-optimistic, Graham told the Journal. "If there is a snafu with the vaccine, that would be another layer of risk [... CFOs] are assuming we will make progress."
The survey, published Tuesday, comes one day after Congress' approval of a $900 billion coronavirus relief package, aimed at stimulating the economy and assisting impacted households and businesses.
CFOs cited the political climate in the U.S. and supply-chain issues as areas with the potential to hinder their progress. On the other hand, concerns CFOs expressed in earlier installments of the Fuqua survey, like access to cash and liquidity, dropped down the list.
Almost 3 in 4 CFOs said their company didn't apply for new credit during the quarter, a 25% increase from the second quarter.
While they expect a rebound in their hiring practices next year, more than half of large firm CFOs said their companies are shifting away from labor towards automation.
Nearly 60% of CFOs said their businesses had automated some services or departments due to the pandemic, accelerating a nascent trend. Among firms ramping up automation, about 80% say automation is reducing the need for low-skill workers, compared to about 45% replacing high-skill employees.