How Do CFO’s Feel About the Current Economy?

A survey from Grant Thornton is the latest research to show that CFOs are getting more enthused about the economy. Even so, the survey found, cost optimization remains their top area of focus, given expectations that spending on operations will increase.

First, the optimism: 34% of the 273 senior U.S. finance leaders surveyed said they were “very optimistic” about the U.S. economy. That marked an 11-quarter high in the quarterly survey, while the 12% who said they were pessimistic tied an 11-quarter low.

“The expectation that the Fed may lower interest rates continues to have a positive effect on some of our clients, and obviously that’s good from the perspective of the overall economic outlook,” said Jim Wittmer, Grant Thornton’s national managing partner for tax growth. “The confidence reflected in the CFO survey is very consistent with the client and prospect interactions we’re having right now.”

While many cost increases are unwelcome, a substantial increase in sales and marketing investment “may be the best indicator of CFOs’ plans to take advantage of the current economic conditions,” according to Grant Thornton’s survey report.

“The confidence reflected in the CFO survey is very consistent with the client and prospect interactions we’re having right now.”

Jim Wittmer

Managing Partner, Grant Thornton

Over the next year, more than half (52%) of survey participants expect sales and marketing costs to increase. That was seven percentage points higher than in the fourth quarter of 2023 and an all-time high for the survey, which began in the first quarter of 2021.

CFOs are also willing to spend upfront on technology to enable cost savings later. Again, more than half (55%) of survey-takers plan to continue increasing their spending on IT and digital transformation, up six percentage points from three months earlier. “Finance leaders clearly see that introducing technology into their operations can help them produce better products at a lower cost,” Wittmer said.

The portion of participants using generative AI rose to 47%. Among those, a majority (54%) said they are using it to improve finance operations and processes.

Still, cost optimization weighs heavily on CFOs’ minds. More than half (55%) of those surveyed ranked it among their top three priority areas, the most of any answer option. Similarly, 50% of finance leaders expect operational costs to increase over the next year. That was 12 percentage points higher than in Grant Thornton’s fourth-quarter 2023 survey, and it tied the all-time high.

According to Paul Melville, Grant Thornton’s national managing principal for CFO advisory, that sudden shift likely reflects inflationary costs more than big new investments in operations. One key cause is shipping price increases stemming from the recent spate of attacks in the Red Sea, Melville said.

Additionally, more than a third (37%) of respondents said they plan to increase real estate and facilities spending. That, said Melville, doesn’t reflect back-to-office strategies, but rather “a warehouse-building boom credited to nearshoring in manufacturing and an e-commerce rise that requires substantial space for warehousing and logistics.”

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https://www.cfo.com/news/34-of-cfos-very-optimistic-about-the-us-economy-survey/713371/