Finance leaders haven’t felt this good about the U.S. economy in nearly three years.
Grant Thornton’s Q1 2024 CFO survey found that 57% of CFOs are optimistic or very optimistic about the U.S. economy, marking an 11-quarter high for the survey. Also, 71% of finance leaders project growth in net profits over the next 12 months.
The survey was conducted from 273 senior finance leaders from a mix of U.S. companies. About half are privately owned; 42% have annual revenues between $101 million and $500 million; and 32% have annual revenues above $1 billion.
“The expectation that the Fed may lower interest rates continues to have a positive effect on some of our clients, and obviously that’s good from the perspective of the overall economic outlook,” Jim Wittmer, Grant Thornton’s national managing partner for Tax Growth, said in a news release. “The confidence reflected in the CFO survey is very consistent with the client and prospect interactions we’re having right now.”
The optimism of finance leaders, including 34% who are “very optimistic” about the domestic economy, is reflected in their expected spending:
- 52% plan to increase spending in sales and marketing, the highest response in this category since the first quarter of 2021.
- 37% plan to increase spending on real estate and facilities.
- 55% plan to increase spending on technology and digital transformation.
- 55% plan to increase spending on cybersecurity.
Technology. CFOs recognize the potential of technology to produce better results at lower costs, and they want to ensure that their organization uses it responsibly.
Among CFOs using generative AI, a record-high 64% have established clearly defined acceptable use policies, the survey said. The technology is being used mostly for data analytics and business intelligence, followed by financial operations and processes.
“Companies are using this technology internally before deploying it in customer-facing processes, because it’s easier to control internally,” said Paul Melville, Grant Thornton’s managing principal of CFO Advisory services. “If they roll technology out to their customers and something goes wrong, then it’s more challenging to manage.”
Operations costs. About half of CFOs said their organization’s operations costs will increase within the next year, and they plan to be more efficient, with 55% citing cost optimization as a priority.
Finance leaders, according to the survey, are turning to automation, data analytics, and AI to enhance efficiency, with 47% reporting the use of generative AI.
Access to capital. Funding is more expensive compared with two years ago, according to the survey. Finance chiefs are divided on the top sources of funding for the next two years:
- 42% cited bank borrowing.
- 42% cited private equity or private credit.
- 31% cited Inflation Reduction Act tax incentives