Each quarter, CFO Signals tracks the thinking and actions of leading CFOs representing North America's largest and most influential companies. Since 2010, the survey has provided key insights into the business environment, company priorities and expectations, finance priorities, and CFOs' priorities.

Key Takeaways

• The proportion of CFOs feeling pessimistic about their companies’ financial prospects increased to 41 percent this quarter from 37 percent in 3Q22.
• More than one-third (35 percent) of CFOs rate the current North American economy favorably, a slight uptick from 33 percent in 3Q22, while a smaller proportion (29 percent) expect it will improve in a year.
• Just over a quarter of CFOs (29 percent) believe that now is a good time to take greater risks, lagging behind last quarter’s 38 percent and falling far short of the two-year average of approximately 50 percent.
• Two-thirds (66 percent) of CFOs plan to allocate or reallocate capital to new business investments next year.
• Nearly three-quarters (74 percent) of CFOs expect talent/labor costs to increase substantially in the year ahead. Meanwhile, CFOs lowered their growth expectations for revenue, which decreased to 4.2 percent from 6.2 percent, and earnings, which dropped to 2.9 percent from 6.4 percent.
• Looking ahead to 2023, CFOs said their top three priorities are cost management (52 percent), financial performance (50 percent), and growth (38 percent).

Economic Outlook

CFOs’ sentiment toward current conditions fell across four of the five economic regions covered in the CFO Signals survey, with North America as the exception. More than one-third (35 percent) of CFOs rated North America’s current economy as “good” or “very good,” a slight increase from 33 percent in 3Q22. However, the proportion of CFOs expecting economic conditions in North America to improve in a year was unchanged at 29 percent. CFOs’ assessments of the current and future economies of Europe, China, South America, and Asia excluding China, were dour. Just 2 percent of CFOs view the current economy of Europe as “good” or “very good,” a decline from last quarter’s 7 percent. Similarly, 3 percent of CFOs view current economic conditions in China as “good” or “very good,” with only 19 percent anticipating better conditions in a year. Looking at Asia, excluding China, CFOs lowered their assessments of the current economy slightly, to 15 percent from last quarter’s 18 percent. CFOs’ views of South America’s current economy stayed flat at 7 percent.

Own Company Optimism and Risk

The percentage of CFOs expressing pessimism for their companies’ financial prospects increased to 41 percent from 37 percent in the prior quarter. This figure is the highest it has been since the 2Q20 CFO Signals survey. The proportion of CFOs saying now is a good time to take greater risks fell to 29 percent from 3Q22’s 38 percent. Geopolitics and political instability stood out as CFOs’ most pressing external risk. Talent retention once again led their list of internal worries, followed by prioritization and execution.

Key Operating Metrics

CFOs again lowered their year-over-year growth expectations for revenue, earnings, capital spending, domestic hiring, and domestic wages. The biggest declines in growth expectations were in revenue, which decreased to 4.2 percent from 6.2 percent, and earnings, which dropped to 2.9 percent from 6.4 percent. Capital spending growth expectations fell to 4 percent from 4.3 percent, and dividends growth dropped to 3.1 percent from 4 percent last quarter. CFOs lowered their expectations for domestic hiring growth to 2.1 percent from 2.6 percent and for domestic wages/salaries to 4.6 percent from 4.8 percent.

Top Priorities for 2023 and Potential Constraints

Looking ahead to 2023, CFOs indicated that their top-three priorities are cost management (52 percent), financial performance (50 percent), and both inorganic and organic growth (38 percent). Two-thirds plan to allocate or reallocate capital to new business investments, and 79 percent of CFOs said their organizations plan to embed more automation/digital transformation into operations. Nearly half (47 percent) of CFOs indicated that a downturn in the U.S. economy would constrain their companies’ strategy, while 1 in 3 CFOs noted that economic headwinds or a recession would constrain their companies’ ability to achieve their performance goals in 2023.

Regarding talent, 41 percent of CFOs indicated that their organizations plan to hire more people than they let go, while 61 percent of CFOs noted they plan to implement digital transformation/automation to replace certain jobs previously performed by humans.

Assessment of Capital Markets

Fifty percent of CFOs indicated that U.S. equities were neither overvalued nor undervalued, while 20 percent viewed them as undervalued. This quarter, the proportion of CFOs regarding U.S. equities as overvalued remained unchanged at 30 percent. Just 15 percent of CFOs found debt financing attractive this quarter, down substantially from 85 percent in 1Q22 and well below the two-year average of 50 percent. Meanwhile, the attractiveness of equity financing dropped slightly, to 25 percent from 26 percent in the prior quarter.

Deloitte’s latest CFO Signals survey reveals that the challenging economic environment that persisted throughout 2022 has impacted CFOs, both in their assessments of global economies and in their planning with respect to strategy, capital, operations, and talent for 2023. Still, CFOs don’t appear to be pulling back on new business investments, introduction of new services or products, or their use of automation and digital technologies,” said Steve Gallucci, National Managing Partner, U.S. CFO Program, Deloitte LLP, and global leader, Deloitte Touche Tohmatsu Limited

Download the findings from the Q4 2022 CFO Signals survey here.