June 20, 2024
Chief financial officers’ optimism regarding the US economy in the second quarter remained unchanged from the first, according to The CFO Survey released today by the Federal Reserve Bank of Richmond, Virginia. Wage bill expectations jumped slightly, as did employment expectations.
On a scale of 0 to 100, CFOs rated their optimism as 60.6 in the new survey, unchanged from the level of optimism in the prior survey.
CFOs also revised downward their expectations for real GDP growth over the next four quarters to 1.8%, down from 2.2% in the prior survey. In addition, the probability of negative economic growth rose to 12.6% in the current report from 10% last quarter.
The CFO Survey report noted median expected full-time employment growth for next year stands at 2.4% for next year, down slightly from the 2.5% forecast in the first quarter. Wage bill growth is expected to remain at median 4.0% for both this year and in 2025.
In terms of revenue, median revenue growth is expected to remain steady at 5.0% next year; median price and unit costs growth are expected to be 3%.
The survey also queried about automation and AI. Nearly two-thirds of CFOs surveyed reported their companies have a strategic priority to automate tasks typically performed by employees. Among firms that plan to automate in the next 12 months, a majority expect to implement AI to perform a wide range of tasks.
Companies indicated that they use automation to increase product quality, cited by 58% of firms; increase output, 49%; reduce labor costs, 47%; and substitute for workers, 33%. Among the group of companies that have automated, 37% of firms (55% of large firms) specifically say they have already implemented AI.
“CFOs say their firms are tapping AI to automate a host of tasks, from paying suppliers, invoicing, procurement, financial reporting and optimizing facilities utilization,” said Duke finance professor John Graham, academic director of the survey. “This is on top of companies using ChatGPT to generate creative ideas and to draft job descriptions, contracts, marketing plans and press releases.”
Responding to a special question in the most recent survey, nearly one-third of CFOs indicated that because of uncertainty about the upcoming election, their companies are postponing, scaling down, delaying or permanently canceling investment.
The report is based on The CFO Survey conducted between May 13 and June 3. It is a collaboration of the Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business.