When survey participants were asked between September 20 and October 1 to rate the financial prospects of their firms on a scale from 0 to 100, the average optimism level was 70.2, down from 74.9 in the second quarter. When asked to rate their optimism about the overall U.S. economy, the average index was 59.9, down from a previous reading of 69.0. Both measures fell for the first time since a significant drop in optimism at the onset of the COVID-19 pandemic.

When firms were asked about their most pressing concerns, labor availability remained at the top. Supply chains and demand/sales/revenue were also relatively more of a concern for respondents in the third quarter compared to the second quarter. Cost pressures also remained a top concern among firms, which manifested itself even more in responses to third quarter special questions about supply chains and labor availability.

On average, CFOs continue to anticipate revenue to rise notably this year and in 2022. However, expectations for 2021 and 2022 employment growth moderated in the third quarter compared to expectations in the second-quarter survey.

Among survey respondents in the third quarter, the mean expectation for real GDP growth over the next four quarters was 3.2 percent. Respondents expected an average annual return on the S&P 500 of 6.2 percent over the next 12 months and 9.4 percent over the next 10 years.

The third quarter CFO Survey included a semiannual investment module to ask participants about their recent structures and equipment investment decisions. Only about one-third of firms anticipate investing in structures over the next six months. Nearly two-thirds of firms anticipate spending on equipment in the near-term. The majority of firms not intending to invest in either equipment or structures over the next six months cite adequate or excess capacity as the reason.

Please refer to The CFO Survey Methodology for more information.

The third quarter survey included special questions on whether firms were experiencing disruptions to their supply chains.

Three-quarters of firms reported disruptions, including production delays, shipping delays, reduced availability of materials, and increased materials prices.

Large firms are more likely to be taking action to adjust their supply chains, such as holding more inventory, diversifying or reconfiguring supply chains, moving production closer to the U.S., or changing shipping logistics. Small firms noted less “room to maneuver” and were more likely to report waiting for supply chain issues to resolve themselves.

Less than 10 percent of respondents anticipate these supply chain difficulties will resolve by the end of this year. Most respondents anticipate these issues will not resolve until the second half of 2022 or later.

Among firms with disruptions that have caused lost/delayed sales, their revenue has been reduced by 5 percent, on average.

The third quarter survey included special questions on the availability of workers. Seventy-four percent of survey participants report that their companies are having difficulty filling open positions. Among these firms, 82 percent are increasing starting wages (by an average of 10 percent) in an attempt to fill these vacancies, and 33 percent are implementing or exploring automation to replace workers.