CFOs expect economy will be worse in a year, Deloitte survey finds

North America’s top corporate finance executives anticipate a downturn across each of the world’s regional economies over the next year, according to new data from Deloitte.

The global consulting and risk management firm released the results of its quarterly CFO Signals survey Thursday, which found respondents have a more pessimistic view of 2024 in the second quarter of this year than they did in the first.

Deloitte’s latest CFO Signals survey for the second quarter of 2023 shows top finance executives have a more pessimistic outlook for every regional economy in the world over the next 12 months. (iStock / iStock)

Across the board, CFOs’ outlook for the year ahead fell for all five geographical regions — North America, Europe, China, South America and Asia, excluding China. Their assessment of North America’s economy 12 months out was the most bleak, with only 34% of respondents saying they expect conditions to improve in a year, down from 54% last quarter.

Economic or financial market risks were also cited by the vast majority (81%) of CFOs as their companies’ greatest external concerns, topping geopolitical risks (57%), which had been cited as the No. 1 worry for respondents for the past several surveys.

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“CFOs are increasingly concerned with the economic environment as they grapple with inflation and high interest rates,” Deloitte’s Global and U.S. leader of the CFO Program, Steve Gallucci, told FOX Business. 

Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, D.C., May 3, 2023. (Saul Loeb/AFP via Getty Images / Getty Images)

“Trade conflicts and Russia’s invasion of Ukraine were pervasive concerns for CFOs over the last calendar year, and geopolitical issues are still commonly cited risks,” he said. “However, banking shocks and the Fed’s prior rate increases may have CFOs more focused on the economy.”

Deloitte’s survey also found CFOs are being directed by their CEOs to focus on cost-reduction measures. Some 33% of respondents said now is a good time to take risks, down from 40% in the first quarter. Fewer CFOs expressed optimism about their own companies’ financial outlooks, too.

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In another noteworthy shift, talent and labor concerns dropped as CFOs’ top internal risk after nine consecutive quarters in favor of execution risks to their strategies or transformations. 

CFOs have cited talent and labor concerns as their top internal worry for the past nine quarterly Deloitte surveys, but execution risks were cited as the No. 1 worry in the latest poll. (Joe Raedle/Getty Images / Getty Images)

While 80% of respondents still pointed to talent among their most worrisome internal risks, execution risks edged it out of the top spot at 81%, indicating that CFOs are slightly more concerned with successfully executing their strategic priorities. 

The survey also asked CFOs about the most significant challenges to managing enterprise risk and regulatory compliance, and, overwhelmingly, the top challenge cited was “changing or increasing regulations and working with regulators.”

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“Businesses are navigating a complicated economic and regulatory environment, and developments in both areas are weighing heavy on their business and economic outlook,” Gallucci explained.