Optimism ticks upward for CFOs as they continue to have upbeat feelings about the economy and their own companies' outlook for 2024, according to the latest quarterly CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. Even amid lingering concerns over monetary policy and labor quality, there's a silver lining for those aiming for growth.
The first quarter results of the survey report CFO optimism toward the U.S. economy at 60.6, an increase from 58.1 in the fourth quarter of 2023 and its highest level since 2021Q2. And toward their own firms’ prospects, CFOs are even more bullish, reporting an average optimism index level of 68.5, up from 67.5 in the fourth quarter.
CFOs’ Biggest Concerns Got Bigger
Despite rising 2024 confidence, the largest concerns for CFOs in Q4 of 2023 only got larger. The top concerns were toward monetary policy and labor quality and availability. Those who indicated monetary policy was their top concern rose to 13.9% from 12.5% in Q4. And those most concerned about labor quality and availability increased to 13.8% from 12.5% last quarter.
This is the third consecutive quarter finance leaders ranked monetary policy as their top concern.
A data point worth noting is a slight drop in cost pressure and inflation concerns. Though slight, those who said it was a top concern fell 8.6% from 8.9% last quarter. Inflation’s cooling has resulted in some reduction of pressure around things such as compensation increases.
Technology’s Impact on Labor
CFOs are almost evenly split on their implementation of labor supplementing technology. Fifty-one percent of CFOs said they had implemented automation tasks over the past 12 months, replacing tasks previously completed by employees. And, according to the results, nearly 40% said automation caused them to either decrease the rate of new hiring, decline to fill openings, or lay off employees.
When delineated between large and small firms, the difference in the automation power of larger technology budgets is evident. Seventy-five percent of large firms said they had implemented this type of automation, while only 44% of small firms said they had done the same.
When asked about motivations for automation, most CFOs credited the bottom line, as 87% said they are automating for the cost savings benefits. However, a top focus on cost savings has not appeared to impact hiring practices, as 59.2% of CFOs said they’ve maintained hiring throughout their automation implementations.
However, since respondents were allowed multiple answers to the question about automation’s impact on hiring, 53% said they’ve either slowed hiring, not filled openings, or laid off employees.
Price Pressures and Growth Expectations
Over half of respondents expected price growth in 2024 to stay at their pre-pandemic levels. According to surveyors, this suggests pressure around prices remains above what many CFOs would consider “normal”.
However, CFOs seemed more keen on increasing revenue in 2025 than they did in previous surveys. The mean growth expectation in 2025 is 8%, an increase from 6% in 2024’s expectations. While mean price growth expectations rose to 4.7% from 4.1%, growth expectations around unit cost, employment, and wage bills all dropped.
The CFO Survey, a quarterly collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, was conducted from February 20 to March 8, reflecting results for 436 U.S. firms responding to the Q1 2024 survey.