For many, the beginning of a new year inspires a change in mood. Resolutions made. Slates wiped clean. Hopes raised.

And then there are chief financial officers, a group that, on the whole, tends to be pragmatic, clear-eyed, and even-keeled. And yet new year optimism seems to have come over CFOs, too. Deloitte’s fourth quarter 2024 North American CFO Signals survey reveals a marked rise in confidence among finance chiefs as they head into 2025.

In particular, CFOs decidedly upgraded their predictions for the North American economy, with 72% of those surveyed saying the status of the economy will be better in a year. In the third quarter survey, that percentage was only 19%. What’s more, in a reversal from previous quarters, an increasing number of finance chiefs see conditions in key regional economies improving in the next 12 months compared to the previous 12 months. Surveyed CFOs also expect to see a rise in their own organizations’ revenues and earnings. This newfound optimism was captured in the fourth quarter CFO confidence score, which measures sentiment across five categories. For this quarter, the reading registered 5.8—the highest reading in 10 quarters.

What factors are driving this uptick in positive sentiment, and what challenges and opportunities should CFOs be prepared for in the coming year?

The election and Fed direction may have boosted CFO optimism

The US election was held just days before the fielding of the survey, which polled 200 CFOs in organizations with a minimum of US$1 billion in revenues. It’s possible that finance chiefs are relieved that the US election is settled, which may provide a degree of certainty about what’s ahead.

Moreover, with the Republican party now holding a majority in Congress, expiring tax provisions in the Tax Cuts and Jobs Act might be extended or made permanent, including bonus depreciation. The scheduled sunsetting of the additional depreciation allowance has been of high concern for many CFOs, as revealed in Deloitte’s third quarter 2024 CFO Signals survey.

Another factor could also be at play: The Federal Reserve held its November meeting just days ahead of the launch of the survey and promptly cut the Fed funds rate by 25 basis points. That marked the second reduction in the overnight rate in a little over eight weeks, following months of predicted cuts that never materialized. Further reductions in the target rate are expected in 2025. While the rate remains high by historical standards, it’s trending in the right direction for organizations carrying expensive debt.

Against this rosier backdrop, CFOs may have upped expectations for their organizations’ financial prospects. When asked how they felt about those prospects compared to three months ago, 59% indicated they were significantly or somewhat more optimistic—up 20 percentage points from six months ago. Perhaps more telling, only 8% said they are significantly or somewhat less optimistic about their company’s prospects. In the previous quarter’s survey, that number was 29%.

Regional economy expectations go from dire to higher  

In the third quarter survey, participants provided a more downbeat assessment of the future status of the European economy. Only 5% expected it to be good in a year. This quarter, 37% indicated they believe economic conditions on the continent will be good in twelve months. Surveyed CFOs expressed enthusiasm for other key global economies as well, particularly South America (figure 1). The respondents’ upbeat regional assessments could be a knock-on effect from their upbeat assessment of the North American economy—the feeling that a rising tide raises all boats.

What’s more, it seems that CFOs aren’t the only members of the C-suite with renewed confidence in overseas markets. In the Fall 2024 Fortune/Deloitte CEO Pulse Survey, 42% of CEOs said they are optimistic about the global economy, up from 7% a year ago.

Respondents may also have reacted to recent reports touting solid growth for the global economy in 2025. Still, import levies placed on major trading partners could put a dent in these lofty expectations.

CFOs are also predicting substantial boosts across several company-specific metrics. Asked to forecast the change in their organization’s revenue in the coming 12 months compared to the previous 12 months, respondents predicted a 10.8% bump up. In the third quarter survey, the prediction was 2.4%. Similarly, surveyed finance chiefs expect earnings to rise by nearly 7.6% in the next year—a sizable jump from the 2.1% increase CFOs forecasted in the third quarter survey.

And in a turnaround from previous survey results, finance chiefs appear to be regaining their appetite for risk. Sixty-seven percent of surveyed CFOs say now is a good time to be taking greater risks. The two-year average is 37%. Last quarter, only 12% of respondents said it was a good time to be taking greater risks.

This switch from defense to offense may help explain why CFOs expect their organization’s capital expenditures to rise by almost 8.7% in the coming year, up from 3.4% in the third quarter survey. And for many organizations, there’s no shortage of available capital to expend. US corporate cash reserves remain at record levels.

This begs the question: Where will CFOs allocate the money? The survey found that numerous organizations will continue to add to their cash balance. Asked to select their organization’s top three priorities for using their capital reserves in 2025, 46% of respondents said they’d hold more cash—the top response (figure 3).

But others struck a more aggressive tone. In fact, 44% of surveyed CFOs indicated their organizations planned to, among other things, allocate or reallocate capital to new business investments, and 43% said they’d fund acquisitions. More than half of CFOs in our fourth quarter 2024 survey (55%) said their organizations are significantly or somewhat more interested in undertaking acquisitions or mergers in the coming year. The response may be due in part to lower interest rates and a perception that the new administration might apply a lighter hand to antitrust enforcement.

Big bump in employee salaries expected

Speed—or lack of it—dominated participants’ assessments of the most worrisome internal risks to their organizations. Technology deployment, including generative artificial intelligence (51%), along with lack of agility and resilience (51%), topped the list. Efficiency and productivity followed next (42%). Talent, which was a major concern for CFOs earlier in the year, was further down the list of respondents’ internal worries this quarter (38%).

Paying for talent may turn out to be a different matter. On average, surveyed finance chiefs expect their organizations to see a 7.3% increase in domestic wages and salaries over the next 12 months compared to the previous 12 months. That’s nearly double the predicted increase (3.65%) from the third quarter survey and well above market projections.

Respondents were asked how they intend to manage employee costs in the coming year. The plan? For starters, linking some proportion of compensation to performance, cited by 49% of CFOs (figure 4). Hiring and promoting from within their organizations was selected by 49%, and 47% said they planned to change benefits or transfer some of the costs to workers.

When survey participants were asked to cite their priorities for finance talent in 2025, mentoring and training potential successors was the top response (44%). But expanding upskilling or reskilling efforts, along with automating processes to enable employees to do higher-value work, were next (43%) on the list.

Gen AI and geopolitics impact spending priorities

A push to rein in departmental spend can be seen in the finance transformations that surveyed CFOs said they intend to focus on in 2025. The most cited finance transformation priority (21%) from a list of options: focusing on developing self-service for business users requesting financial information. The self-service setup can help internal stakeholders access and analyze reports or data.

Such self-service finance systems will likely be aided by the advent of agentic AI, the so-called third wave of artificial intelligence. Among other things, agentic AI systems can provide improved access to information, perform complex tasks, and deliver actionable insights—with minimal human intervention. “The urgency for CFOs is to look beyond the basics and reimagine entire business processes with AI,” notes Dean Hobbs, principal and US chief operating officer for the Finance & Performance practice at Deloitte Consulting LLP. “And in the process, they’re fundamentally reimagining self-service models to build capacity and take efficiency gains.” 

The value of getting finance data into the hands of other business leaders—and at a faster clip—may be obvious. But importantly, the self-service model can also help off-load manual chores from finance workers, thus boosting productivity. A self-service setup can also free up staffers to concentrate on more valuable tasks. That same impulse—getting finance employees onto higher-value work—may explain why deploying gen AI was second on the list (18%) of CFOs’ transformation priorities in 2025.

There’s another possible reason that gen AI was higher on the list: Senior management appears to be willing to invest in back-office finance systems. When asked to name changes they expect their organizations to make in the coming 12 months, 46% of respondents cited increasing deployment or spend on gen AI in finance (figure 5).

The top response to the question, however, might speak to lingering concerns about world events. Indeed, 47% percent of CFOs said their organizations will explore options for relocating parts of their global value chain over the next year. That seems to align with participants’ assessments of outside risks to their organizations. Indeed, 46% cited geopolitics as their most worrisome external risk, second only to the economy (55%). Likewise, when surveyed CFOs were asked to identify their top priority for 2025, enterprise risk management was the most cited answer (42%).

Confidence is one thing, overconfidence is another.

Scroll through the fourth quarter 2024 longitudinal data below to see how surveyed CFOs are thinking about growth, risk appetite, and most worrisome external and internal risks for 2025.