Data & Results – Q3 2022

Sept. 28, 2022

CFOs See Higher Costs and Lack of Skilled Labor; Reduce Outlook for Growth

Financial decision-makers responding to the third quarter survey lowered their expectations for real GDP growth amid concerns over inflation and trouble finding skilled labor.

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  • CFO Optimism

    CFOs said their optimism about the overall economy rose modestly from its recent low. Optimism about their own firms, though well below levels from a year ago, remained steady alongside some improvement in expectations for revenue, employment and cost growth.

  • CFOs’ Most Pressing Concerns

    In the third quarter, CFOs said inflation was the most pressing concern facing their firms.

  • CFOs’ Expectations for Their Firms’ Performance

    Firms revised unit cost growth during 2022 down to 8.9 percent from 10.2 percent in the prior survey. These costs remain at elevated levels, and nearly all firms reported experiencing larger-than-normal cost increases. (See special questions below.)

    CFOs' Growth Expectations for Their Own Firms, by Response QuarterQ3 2022Q2 2022
    Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years2022202320222023
    Revenue9.1%
    (7.0%)
    7.4%
    (6.0%)
    9.3%
    (8.0%)
    6.7%
    (6.0%)
    Price7.4%
    (5.0%)
    5.1%
    (4.0%)
    9.3%
    (6.0%)
    5.8%
    (4.0%)
    Unit Cost8.9%
    (6.0%)
    6.6%
    (5.0%)
    10.2%
    (8.0%)
    6.5%
    (5.0%)
    Employment (full-time)8.4%
    (2.5%)
    3.5%
    (2.4%)
    4.5%
    (2.6%)
    3.7%
    (2.3%)
    Wage Bill8.5%
    (6.0%)
    6.8%
    (5.0%)
    8.4%
    (7.0%)
    6.9%
    (5.0%)
    Non-wage Compensation7.5%
    (5.0%)
    7.8%
    (6.0%)
    8.0%
    (7.0%)
    7.6%
    (6.0%)
    Note: Q3 2022 data in the table reflect results for 277 to 296 U.S. firms responding to the Q3 2022 survey (August 24 – September 9, 2022). Results from the Q2 2022 survey (May 25 – June 10, 2022) are shown for comparison (for 292 to 309 firms). See additional notes in the chart above.
  • CFOs’ Expectations for the Aggregate Economy

    CFOs on average expect real GDP to grow 0.9 percent over the next 12 months, down from an expectation of 1.5 percent last quarter. Across CFOs, the average probability of negative GDP growth over the next 12 months was 30 percent, compared to a 21 percent probability last quarter.

    Expectations for Real GDP Growth Over Next Four Quarters, by Response QuarterQ3 2022
    (N=274)
    Q2 2022
    (N=291)
    Weighted Mean0.9%1.5%
    Weighted Median0.9%1.7%
    Probability of Negative Growth
    (mean share of probability on bins below zero)
    30.3%20.8%
    Note: Responses are weighted by sales revenue. See additional notes in the chart above.
    Expectations for Stock Market Performance, by Response QuarterQ3 2022Q2 2022
    Expected Annual S&P 500 Returns Over Next 12 Months and Next 10 Years12 Mos
    (N=209)
    10 Yrs
    (N=222)
    12 Mos
    (N=221)
    10 Yrs
    (N=233)
    Worst Case (a 1-in-10 chance the actual return will be less than):-8.3%3.0%-8.2%3.2%
    Most Likely Case2.8%9.3%2.4%9.3%
    Best Case (a 1-in-10 chance the actual return will be greater than):9.5%13.9%8.7%14.2%
    Note: The table shows responses from firms that indicated they closely follow the stock market. Results from the Q2 2022 survey (May 25 – June 10, 2022) are shown for comparison. Responses are unweighted and winsorized at 2.5% and 97.5% to remove the potential influence of extreme values. Please see The CFO Survey Methodology for further information.
    Source: Duke University, FRB Richmond and FRB Atlanta, The CFO Survey – Q3 2022 (August 24 – September 9, 2022)
  • Semiannual Questions on Investment

    The third quarter CFO Survey included a semiannual investment module to ask participants about their recent structures and equipment investment decisions. Compared to the first quarter, fewer respondents said they planned to invest in structures or equipment over the next six months, with most saying they had ample capacity. In addition, the share of CFOs noting unfavorable financing conditions doubled to 15 percent, and the share citing a need to preserve cash increased 10 percentage points to 38 percent.

  • Special Questions on Cost Increases

    The third quarter survey asked CFOs whether they were experiencing larger than normal cost increases. The share of firms with abnormally large increases in the majority of their costs doubled since the second quarter of last year, from 26 percent to more than 52 percent. More than 80 percent of firms expect cost pressures to persist into next year, and around a third expect these pressures to last longer than a year.

    For additional discussion of these results, visit our Research & Commentary section.

  • Special Questions on Labor Availability

    CFOs said they anticipate continuing to hire at a moderate pace, despite concerns about labor quality and availability. (See firm expectations and top concerns above.) Responding to a series of special questions, they also noted particular difficulty hiring and retaining high-skilled workers. Roughly one-fourth of respondents expect hiring conditions to become more difficult by the end of 2022, compared to only one-tenth of respondents who expect hiring conditions to ease. 

    For additional discussion of these results, visit our Research & Commentary section.

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