Key Findings

  • Deloitte's quarterly survey shows CFOs' risk appetite has fallen to its lowest level since 2009, with major concerns over inflation, the economic outlook, overseas conflicts, and uncertainty surrounding the November election results.
  • Among North American CFOs surveyed, only 12% believe the current environment is favorable for taking on greater risk, compared to 26% in the second quarter and 41% in the third quarter of 2023. Nearly three-fifths (58%) of CFOs say the outcome of the November 5 election is "extremely or very important" to their businesses, and only 19% expect the North American economy to improve over the next year.
  • Deloitte notes that "the upcoming election could bring the biggest changes," involving potential adjustments to immigration laws, trade policy, labor laws, tax rates, and capital expenditure deductions.

In-Depth Analysis

The Conference Board's Leading Economic Index (LEI) corroborates CFOs' cautious stance. The index fell for the sixth consecutive month in August, due to pessimistic consumer expectations and a decline in new orders for materials and consumer goods. The board said Thursday that the LEI "continues to signal headwinds to economic growth."

Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at the Conference Board, said economic growth could slow in the second half of this year as high prices, high interest rates, and mounting debt erode domestic demand. Citing the board's forecast, she noted that if the Federal Reserve further cuts rates beyond the easing announced on Wednesday, the economy could accelerate next year.

The Federal Reserve on Wednesday cut its key interest rate by 0.5 percentage points to a range of 4.75%-5%, citing progress in bringing inflation down to its 2% target from over 9% two years ago. According to median projections released Wednesday, Fed officials expect the federal funds rate to fall to 4.4% by December and 3.4% by the end of next year.

Fed Chair Jerome Powell on Wednesday rejected predictions of a recession, and his optimism contrasted with the pessimism shown in the Deloitte survey. "I don't see anything in the economy right now that suggests the likelihood of a recession—sorry, an economic downturn—is elevated," he said at a press conference. "Growth is solid, inflation is coming down, and the labor market remains at a healthy level." Fed officials' median projections show GDP growth of 2% this year, next year, and in 2026. Powell said, "If you look at forecasters or talk to businesses, they'd say 2025 should be a good year."

The Atlanta Fed said Wednesday that the economy could expand at an annual rate of 2.9% in the third quarter. According to Bureau of Economic Analysis data, GDP grew at an annual rate of 1.4% in the first quarter and 3% in the second quarter.

Although CFOs worry about the election's impact on business prospects, Deloitte notes that their top priority for the federal government is removing barriers to retaining skilled labor, including addressing wage inflation, talent shortages, and regulatory obstacles. About one-third of CFOs say labor and employment regulations have the greatest impact on business prospects, including the Federal Trade Commission's ban on non-compete clauses and restrictions on confidentiality agreements, said Steve Gallucci, leader of Deloitte's CFO Program.

"Geopolitics remains a real concern for CFOs and has consistently ranked among the top external risks in recent quarterly surveys," Gallucci said in an email response Thursday. "CFOs really don't like uncertainty."

Deloitte surveyed 200 CFOs from companies with annual revenue of at least $1 billion across five industries.