Data & Results – Q2 2023
CFOs Modestly Downgrade Economic Growth Expectations
Financial decision-makers lowered their expectations for U.S. economic growth in the next year, with almost 40 percent of small firms expecting that tighter financing will curtail business spending.
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CFO Optimism
When asked between May 24 and June 9 to rate optimism about the overall U.S. economy on a scale from 0 to 100, the average rating from CFOs was 54.8, similar to the low level of optimism in the first quarter of the year. However, optimism was higher for the participants who responded after the debt ceiling resolution passed Congress: the average optimism rating was 57.4 among those who responded after the resolution passed Congress and 51.5 among those who responded before the resolution. Optimism among respondents about the financial prospects of their own firms also improved following the resolution on the debt ceiling.
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CFOs’ Most Pressing Concerns
Concerns about inflation and labor availability abated somewhat in the second quarter, while concerns about monetary policy and demand increased as a share of total mentions.
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CFOs’ Expectations for Their Firms’ Performance
The second quarter results suggest that price-growth expectations continued to moderate, as did median employment expectations.
CFOs' Growth Expectations for Their Own Firms, by Response Quarter Q2 2023 Q1 2023 Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years 2023 2024 2023 2024 Revenue 2.9%
(5.0%)6.7%
(5.0%)7.2%
(6.0%)7.1%
(5.0%)Price 4.6%
(3.8%)5.0%
(3.0%)5.2%
(5.0%)4.0%
(4.0%)Unit Cost 6.8%
(5.0%)5.7%
(3.0%)6.0%
(5.0%)4.6%
(4.0%)Employment (full-time) 6.1%
(2.5%)2.7%
(1.5%)2.2%
(2.6%)3.4%
(2.5%)Wage Bill 6.5%
(5.0%)5.9%
(4.0%)7.1%
(5.0%)5.9%
(4.0%)Note: Q2 2023 data in the table reflect results for 293 to 326 U.S. firms responding to the Q2 2023 survey (May 24 – June 9, 2023). Results from the Q1 2023 survey (February 27 – March 10, 2023) are shown for comparison (for 254 to 293 firms). Revenue, Price, and Unit Cost are weighted by sales revenue. Employment and Wage Bill are weighted by employment. These data are also winsorized at 2.5% and 97.5% to remove the potential influence of extreme values. -
CFOs’ Expectations for the Aggregate Economy
Growth expectations for gross domestic product for the next year were downgraded to an average of 1.0 percent from 1.4 percent last quarter, alongside an increase in the probability that respondents assigned to economic contraction.
CFOs’ Expectations for Real GDP Growth Over Next Four Quarters, by Response Quarter Q2 2023 Q1 2023 Weighted Mean 1.0% 1.4% Weighted Median 0.8% 1.3% Probability of Negative Growth 24.5% 19.3% Note: Q2 2023 data in the table reflect results for 300 U.S. firms responding to the Q2 2023 survey (May 24 – June 9, 2023) and that indicate they are familiar with Gross Domestic Product (GDP). Results from the Q1 2023 survey (February 27 – March 10, 2023) are shown for comparison (for 272 firms). Responses are weighted by sales revenue. Expectations for Stock Market Performance, by Response Quarter Q2 2023 Q1 2023 Expected Annual S&P 500 Returns Over Next 12 Months and Next 10 Years 12 Mos
(N=216)10 Yrs
(N=225)12 Mos
(N=185)10 Yrs
(N=193)Worst Case (a 1-in-10 chance the actual return will be less than): -5.8% 3.0% -6.7% 2.6% Most Likely Case 4.2% 8.5% 3.1% 8.4% Best Case (a 1-in-10 chance the actual return will be greater than): 9.9% 13.1% 9.3% 12.9% Note: The table shows responses from firms that indicated they closely follow the stock market. Results from the Q1 2023 survey (February 27 – March 10, 2023) 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 – Q2 2023 (May 24 – June 9, 2023) -
Special Questions on Financing Conditions
The second quarter survey asked firms whether access to or the cost of financing was constraining their investment or spending plans.
More than 30 percent of small firms (those with fewer than 500 employees) reported that access to or the cost of financing has constrained investment or spending plans, compared with about 20 percent of large firms.
Looking forward, almost 40 percent of small firms responded that they expect lower investments and spending in the remainder of the year due to financing conditions, versus about a quarter of large firms.
Small and large firms reported that if access to or the cost of financing constrained spending, it would primarily hinder the pursuit of new business opportunities.
Small firms were more likely than large firms to report that financing conditions would make it difficult to replace or repair capital assets and refinance debt.
For additional discussion of these results, visit our Research & Commentary section.
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