CFO optimism falls for third quarter to 2020 low

Optimism among CFOs about their own companies dropped for a third consecutive quarter, marking the lowest it’s been since midway through 2020, according to a survey released Wednesday morning.

In its latest quarterly “CFO Signals” survey, the consulting firm Deloitte found that CFO net optimism in connection to their companies’ prospects came in at -21 for the fourth quarter of 2022. That figure was a few points more negative than Q3 and 10 more than Q2, according to the consulting firm.

FILE – The Deloitte offices in London (Jack Taylor/Getty Images / Getty Images)

Net optimism, as measured by the difference between the share of CFOs respectively expressing higher and lower levels of optimism, hasn’t been at such a low level since 2020’s second quarter, when it was -54, the survey found.

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During the latest quarter, 41% of CFOs surveyed suggested they were “more pessimistic” about their companies’ prospects than they were a few months earlier, compared to 20% who said they were “more optimistic.”

The share of CFOs who indicated they thought it was a good time for risk-taking also came in at a low, similar to but slightly higher than in the second quarter of 2020. In this year’s fourth quarter, 29% said they favored taking more risks, just 2% higher than the 27% in 2020’s Q2, according to the survey. Last quarter, the proportion who favored risk-taking saw an increase.

U.S. equity futures turned negative ahead of the Tuesday trading session on Wall Street. (Nicole Pereira/New York Stock Exchange via AP)

Both internal and external risks weighed on CFOs during the fourth quarter, Deloitte also found.

The consulting firm reported geopolitics and stability was the top cited external risk at 54%, followed by inflation (41%) and policies and regulations (29%). More than a quarter, 27%, said the possibility of a recession caused them the most anxiety.

Meanwhile, internally, retention of workers, prioritization and execution of strategies, and recruiting were found to be stressing CFOs the most.

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Additionally, the survey found that outlooks for the economies of Europe, China, the rest of Asia and South America over the next year went down to varying degrees in comparison to last quarter, respectively coming it at 9%, 19%, 18% and 8% for CFOs indicating they anticipate things improving in those regions. For North America’s economy, expectations remained the same quarter-over-quarter, with 29% of CFOs saying the region’s conditions would be “better in a year.”

CFOs, when considering 2023, pointed to a potential recession, inflation and consumer purchasing power most often as factors that had the greatest potential to constrain company financial goals. Over one-third (37%) cited the category “economy/recession,” while 18% said rising costs and 13% indicated “consumer purchasing power/sentiment,” Deloitte found.

In its latest quarterly “CFO Signals” survey, the consulting firm Deloitte found that CFO net optimism in connection to their companies’ prospects came in at -21 for the fourth quarter of 2022. (Artur Widak/NurPhoto via Getty Image / Getty Images)

The survey, conducted between Nov. 7 and Nov. 21, included 126 CFOs from the U.S., Canada and Mexico, most of whom work for companies with annual revenues more than $1 billion.

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