Monetary policy remains the most pressing concern among financial executives in the third quarter, as highlighted by a recent survey conducted by Duke University's Fuqua School of Business alongside the Federal Reserve Banks of Richmond and Atlanta. The survey revealed that more than 12% of respondents identified monetary policy as their primary worry.
While this figure reflects a one percentage point decline from the previous quarter, it maintains its position as the foremost concern for the fifth consecutive time, as per the CFO survey results. The survey actively engages chief financial officers, owner-operators, vice presidents, directors of finance, accountants, controllers, treasurers, and other financial decision-makers.
It concluded on September 6, just under two weeks prior to the Federal Open Market Committee's decision to reduce benchmark rates by 50 basis points. Concerns regarding inflation saw a decrease, dropping to 8% among respondents, down from 12% in the previous quarter. 'Price growth expectations have eased into what we consider more normal territory,' stated Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond.
Moreover, worries surrounding demand, sales, and revenue constituted the second-largest concern for companies, rising to 9.6% of respondents, compared to 8% in the preceding quarter. Anticipated revenue growth for financial executives in 2024 also experienced a cooling effect, with mean expectations dropping to 4.9% in the third-quarter survey, down from 5.5% in Q2.
'In spite of uncertainty in the economy, firms continue to expect a soft landing,' Waddell remarked. 'Financial executives predict growth in their employment and revenues over the course of the year, as organizations allocate resources to the infrastructure that supports not only ongoing operations but also capacity increases and new product offerings.' Overall, optimism levels showed minor fluctuations according to the survey findings.
The index reflecting financial executives' attitudes towards their respective companies increased slightly to 69.4 in the September quarter, up from 69 in June. Attitudes towards the broader US economy remained stable at 60.6, consistent with the previous quarter. However, challenges lie ahead. Approximately 30% of firms reported delays, reductions, or cancelations of investment initiatives due to uncertainty surrounding the impending election.
'In addition to the political climate, factors like the overall health of the economy and future demand were also cited as concerns by respondents,' the Richmond Fed stated in a disclosure regarding the survey outcomes..