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An odd divide emerges as CFOs really feel much less optimistic in regards to the economic system than a yr in the past—however comparatively upbeat about their very own prospects


Good morning.

Following years of optimism in regards to the U.S. economic system, CFOs and different monetary professionals are beginning to see that optimistic outlook drain away. In reality, it’s beginning to look as if the economic system’s glass is now half empty.

A yr in the past, optimism amongst CFOs was driving excessive, with three in 4 feeling optimistic in regards to the economic system. Prior to now yr, that ratio has tumbled to only above 50%, in response to a survey launched Friday by the Federal Reserve Banks of Richmond and Atlanta and Duke College.

What’s extra, CFOs stated the possibility of seeing adverse development within the subsequent 4 quarters rose to 21% PHRASING IS CONFUSING, COULD WE SAY 21% EXPECT THE ECONOMY TO CONTRACT?. That’s double the 12% probability of falling GDP solely 1 / 4 in the past, which was in flip twice as excessive because the fourth quarter of 2021. “We’ve seen for 2 straight quarters now a shift in how companies take a look at the following 12 months—a shift right into a adverse course,” Sonya Ravindranath Waddell, an economist on the Richmond Fed, tells me.

The explanations cited for the dimmer outlook most likely received’t shock CFOs: Essentially the most urgent concern cited within the second quarter was inflation, which supplanted hiring as the largest headache cited within the survey. Provide-chain considerations and financial coverage had been additionally named extra steadily as high considerations within the second quarter.

A curious silver lining to the survey was this: Of the 320 CFOs surveyed, extra felt higher about their very own prospects regardless of their pessimism in regards to the U.S. economic system. Some 68% of CFOs remained optimistic about their very own firm, down from 75% a yr earlier than. That’s a drop of about 7 share factors, versus the 18 percentage-point drop in financial optimism.

“CFOs are nonetheless seeing their very own companies develop and are capable of meet the demand that they see,” says Waddell. “There’s only a sense of pessimism in regards to the U.S. economic system, whereas their very own companies are nonetheless doing comparatively okay.”

CFOs anticipate their income to develop by a median of 9.3% this yr, with that charge falling to six.7% subsequent yr. Adjusted for inflation, nevertheless, these figures translate into flat or adverse actual development. Employment development, in the meantime, is anticipated to additionally gradual to three.7% in 2023 from an estimated 4.5% this yr.

A separate survey final month of 949 world senior accountants and monetary professionals, together with 100 CFOs, additionally discovered confidence has fallen dramatically in all areas of the world, particularly within the Center East and Western Europe, each of that are depending on commerce to Russia and Ukraine. A world confidence index tracked by the survey fell to adverse 29.2 final quarter from 9.5 within the first quarter.

The survey, performed by the Affiliation of Chartered Licensed Accountants and the Institute of Administration Accountants, additionally confirmed that the arrogance index amongst North American monetary executives fell much less sharply, however nonetheless slid to ranges it noticed within the depths of the Covid-19 shutdowns.

Inflation considerations are weighing on world CFOs as effectively. In mid-2020, round two in ten expressed concern about rising working prices. Two years of disrupted provide chains and rising inflation has left 69% of respondents within the IMA/ACCA survey frightened about rising prices.

“We’re seeing rising power and transport costs in addition to provide shortages driving up working prices,” Loreal Jiles, vp of analysis on the IMA, tells me. Increased prices helped push U.S inflation to a 40-year excessive and prompted the Fed to lift charges by 75 foundation factors for 2 months working. That in flip has began to erode government confidence, she says.

Basically, accountants and CFOs have a tendency to not be both wildly optimistic nor wildly pessimistic. In reality, Jiles says, their publicity to granular monetary information and operational well being makes their outlook a fairly dependable predictor of future financial efficiency. “They’re a fairly level-headed group, which makes them a trusted supply for gauging world financial efficiency,” she says.

See you tomorrow.

Kevin Kelleher

Twitter: @kpkelleher

Large deal

Most corporations are accustomed to seeing executive-pay votes get rubber stamped by their shareholders. However buyers and proxy advisors at bigger corporations are beginning to reject so-called “say-on-pay” votes, in response to a report from consulting agency Mercer. Almost 4% of say-on-pay votes for S&P 500 corporations up to now this yr didn’t obtain 50% of votes, the extent wanted for passage, in contrast with 2.4% for all corporations. Amongst corporations that noticed compensation votes fail had been Goodyear Tire & Rubber, PacWest Bancorp, and Wynn Resorts. Institutional Shareholder Service, a number one proxy-advisory agency, has beneficial voters reject 11% of S&P pay proposals this yr.

Shareholders at Goodyear, PacWest Bank and Wynn Resorts are rejecting executive pay proposals this year.

Courtesy of Mercer

Going deeper

Michael Saylor has an extended historical past of grabbing headlines and making controversial bets, however because the MicroStrategy CEO steps again, veteran Fortune correspondent Shawn Tully chronicles his humble beginnings, lavish way of life, and goes deep into the corporate’s funds to color an image of a sophisticated man who has risked every part going lengthy on crypto. 

Spotify has had its share of controversies this yr, together with the dustup between Joe Rogan and artists like Neil Younger. However it’s seeing some excellent news in its “Work from Wherever” coverage that lets workers decide how usually they work from the workplace and the place they work, so long as Spotify has an operation there.

Based on Fortune‘s Aman Kidwai, the flexible-work program has delivered decrease turnover charges in comparison with pre-pandemic ranges and elevated various illustration. Attrition on the firm was 15% decrease within the second quarter in comparison with the identical quarter in 2019, whereas new, extra various hires have come from Spotify’s fundamental hubs in New York and Los Angeles.


Blake Jorgensen was appointed CFO and government vp at PayPal, efficient August 3, 2022. Jorgensen has 40 years expertise, most lately serving as government vp of particular tasks at Digital Arts for 5 months and earlier than that as CFO on the gaming firm for ten years. He was additionally Levi Strauss’ CFO from July 2009 to August 2012 and CFO at Yahoo earlier than that. Jorgensen will obtain a base compensation of $750,000, a brand new rent money bonus with an mixture worth of $6 million, and a goal bonus alternative of 125% of his base wage. Jorgensen replaces John Rainey, who departed to grow to be Walmart’s CFO in Could after seven years at PayPal.

Rambus, a maker of pc chips and silicon IP, tapped Desmond Lynch as CFO and senior vp, efficient August 1. Lynch had served as Rambus’ vp of finance since 2020 and earlier than that held senior finance roles at Knowles Corp., Renesas Electronics, Amtel, and Nationwide Semiconductor. He’ll obtain a base wage of $350,000, a money incentive bonus eligibility at 75% of his base wage, and a performance-based fairness incentive grant of $1,225,000. Lynch replaces Keith Jones as CFO, who will resign on Aug. 5 to affix Adeia, an IP enterprise.

Kenneth Krause will be a part of Rollins, Inc., a pest-control firm that owns manufacturers corresponding to Orkin and Clark, as CFO and government vp beginning Sept 1. Krause has served as CFO at safety-equipment producer MSA Security since 2015 and had been the corporate’s director of inside audit earlier than that. He replaces Paul Edward Northen, who vacated the CFO function a yr in the past amid an SEC probe. Final April, R0llins agreed to pay an $8 million settlement with the SEC, which discovered that Northen directed improper accounting practices. Julie Bimmerman has since been serving as interim CFO.


“The fact is we over-hired… I authorized and took duty for a way we staffed up to now couple of years. I anticipated that what we noticed in 2020 and 2021 by way of market situations would last more than it turned out to final.”

—Robinhood CEO Vlad Tenev, asserting that the commision-free buying and selling firm will reduce its headcount by roughly 23% after latest turmoil. The corporate affords a cautionary story in regards to the challenges of hiring into unstable markets by which demand surges in growth occasions, then rapidly tries up in bear markets.

That is the net model of CFO Daily, a publication on the tendencies and people shaping company finance. Signal as much as get it delivered free to your inbox.

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