CFOs Are Slightly More Downbeat About the Domestic Economy

Interest rates hikes and the trade spat could affect company fortunes, they say in Deloitte survey, although overall optimism is still strong.

Chief financial officers, who started the year on a very optimistic note about the economy, have become slightly more wary in 2018’s third quarter, according to a survey in Deloitte’s “CFO Signals.”

 Overall, though, they still have a buoyant outlook for the economy’s future. Lately, a spate of worrisome news has tempered the earlier sunny outlook to a degree. Positive assessments of the North American economy dipped to 89% from 94% in the second quarter, the professional services firm’s poll shows. Concerns are rising over higher interest rates and trade problems. Plus, CFOs worry whether they will be able to attract sufficient financial talent for their shops.

Expectations for their own companies fell for the second straight quarter and are below the survey’s two-year average.

Elsewhere in the world, pessimism is more rife. European CFO optimism fell to 32% from 47%, while Chinese positive sentiment slid to 37% from 55%. Indeed, the relatively higher American optimism tracks with stock market performance: The S&P 500 is up almost 9% this year, but the Euro Stoxx index is down 1.1%, and the Shanghai Composite is off 15%.

Trade tensions and the tariff skirmish between the US and China could eventually have detrimental effects on corporate performance, the CFOs indicated. That said, company-specific unease is more acute than any stemming from outside forces. For the first time in 2018, CFOs named internal risks (40%) as more harmful to company performance than external risks (37%).

CFOs’ concerns over attracting enough finance talent will result, they said, in more outsourcing of tasks, perhaps overseas.

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