July 14, 2021
CFOs and other financial decision-makers continue to be optimistic about U.S. economic prospects for 2021. However, when asked about their key concerns, labor availability and cost pressures rose to the top.
When survey participants were asked between June 21 and July 2 to rate the financial prospects of their firms on a scale from 0 to 100, the average optimism level was 74.9. When asked to rate their optimism about the overall U.S. economy, the average index was 69.0. Both measures increased from the first quarter.
When firms were asked about their most pressing concerns, labor availability and cost pressures rose to the top. Demand/sales/revenue was relatively less of a concern for respondents in the second quarter compared to the first quarter.
On average, CFOs expect revenue and employment to rise notably through 2021. Firms were also more likely to have increased spending (and less likely to have decreased spending) in the last three months.
| CFOs’ Growth Expectations for Their Own Firms, by Response Quarter | Q2 2021 | Q1 2021 | ||
|---|---|---|---|---|
| Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years | 2021 | 2022 | 2021 | 2022 |
| Revenue | 9.6% (6.5%) | 9.3% (6.0%) | 8.0% (5.0%) | 9.0% (5.0%) |
| Price | 7.9% (3.8%) | 5.9% (3.0%) | 5.0% (3.0%) | 4.4% (3.0%) |
| Employment (full-time) | 6.3% (3.0%) | 5.9% (2.7%) | 5.5% (3.2%) | 3.9% (2.5%) |
| Wage Bill | 9.6% (4.0%) | 8.5% (4.0%) | 4.6% (3.0%) | 5.1% (3.5%) |
| Non-wage Compensation | 6.9% (5.0%) | 7.1% (5.0%) | 5.3% (4.0%) | 5.8% (5.0%) |
| Unit Cost | 7.1% (4.0%) | 5.7% (4.0%) | - | - |
Among survey respondents in the second quarter, the mean expectation for real GDP growth over the next four quarters was 4.9 percent. Respondents expected an average annual return on the S&P 500 of 6.7 percent over the next 12 months and 8.3 percent over the next 10 years.
| Expectations for Real GDP Growth Over Next Four Quarters, by Response Quarter | Q2 2021 | Q1 2021 |
|---|---|---|
| Weighted Mean | 4.9% | 4.2% |
| Weighted Median | 5.0% | 3.8% |
| Probability of Negative Growth (mean share of probability on bins below zero) | 3.0% | 3.3% |
| Expectations for Stock Market Performance (for Average Annual S&P 500 Returns) | Expected Return Over Next 12 Months | Expected Return Over Next 10 Years |
|---|---|---|
| Worst Case (a 1-in-10 chance the actual return will be less than): | -2.4% | 2.7% |
| Most Likely Case | 6.7% | 8.3% |
| Best Case (a 1-in-10 chance the actual return will be greater than): | 12.4% | 12.8% |
The second quarter CFO Survey included a semiannual credit module to understand firms’ requests for credit, sources of credit, and perceived access to credit. Compared to the fourth quarter of 2020, a larger share of respondents turned to banks or finance companies for loans, while a smaller share of respondents applied for government loans.
| Overall, do you feel that it has become more or less difficult to obtain credit for your business over the last 6 months? Percent of Firms | Q2 2021 | Q4 2020 |
|---|---|---|
| More Difficult (and reason) | 26.5% | 35.1% |
| Change in Creditworthiness of Business | 3.6% | 7.8% |
| Change in Lending Standards | 16.9% | 20.8% |
| Other | 6.0% | 6.5% |
| Unsure / Same | 24.1% | 54.5% |
| Less Difficult (and reason) | 49.4% | 10.4% |
| Change in Creditworthiness of Business | 22.9% | 5.2% |
| Change in Lending Standards | 20.5% | 1.3% |
| Other | 6.0% | 3.9% |
The second quarter survey included special questions on whether firms were experiencing larger than normal input cost increases. Approximately 80 percent of respondents reported larger than normal cost increases that are anticipated to last for many months. Much, though not all, of this increase is expected to translate into price increases.
For additional discussion of these results, visit our Research & Commentary section.The second quarter survey included special questions on the availability of workers. More than half of the 75 percent of firms that reported challenges finding workers also reported that the worker shortage reduced revenue—a reality that was even more pronounced for small businesses.
For additional discussion of these results, visit our Research & Commentary section.Receive an email notification when The CFO Survey updates are posted online.