by Yardeni Research Inc. President Ed Yardeni joins “Making Money” to provide insight into consumer sentiment and the possibility of a recession.
Optimism among CFOs about their own companies fell for the third straight quarter, marking the lowest level since mid-2020, according to a survey released Wednesday morning.
In its latest quarterly “CFO Signals” survey, consulting firm Deloitte found that CFOs’ net optimism about their companies’ prospects was -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 consultant.
FILE – Deloitte’s London offices (Jack Taylor/Getty Images/Getty Images)
Net optimism, as measured by the difference between the proportion of CFOs expressing respectively higher and lower levels of optimism, has not been this low since the second quarter of 2020, when it was -54, according to the survey.
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Over the past quarter, 41% of CFOs surveyed suggested they were “more pessimistic” about their companies’ prospects than they were a few months earlier, compared with 20% who said they were “more optimistic.”
The share of CFOs who indicated they thought it was a good time to take risk also hit a low, similar to but slightly higher than in the second quarter of 2020. In the fourth quarter of this year, 29% said they favored taking more risk, up just 2% from 27% in the second quarter of 2020, according to the survey. Last quarter, the proportion favoring risk-taking increased.
US stock futures turned negative ahead of Tuesday’s 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 consultancy reported that geopolitics and stability were the main external risks cited with 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.
Internally, meanwhile, it was found that employee retention, strategy prioritization and execution, and recruiting were the most stressful factors for CFOs.
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In addition, the survey found that the outlook for the economies of Europe, China, the rest of Asia and South America over the next year has dimmed to varying degrees compared to the last quarter, coming respectively to 9%, 19%, 18 % and 8% for CFOs who indicate they anticipate things will improve in those regions. For the North American economy, expectations were flat quarter-over-quarter, with 29% of CFOs saying conditions in the region would be “better within a year.”
The CFOs, looking to 2023, pointed to a potential recession, inflation, and consumer purchasing power as the factors that had the greatest potential to constrain the company’s financial goals. More than a third (37%) cited the “economy/recession” category, while 18% said rising costs and 13% indicated “buying power/consumer sentiment,” Deloitte found.
In its latest quarterly “CFO Signals” survey, consultancy Deloitte found that CFOs’ net optimism about their companies’ prospects was -21 for the fourth quarter of 2022. (Artur Widak/NurPhoto via Getty Image/Getty Images)
The survey, conducted between November 7 and 21, included 126 CFOs from the US, Canada and Mexico, most of whom work for companies with annual revenues of more than $1 billion.
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