NEW YORK—The long term outlook for the U.S. economy remains strong, according to chief financial officers surveyed by Deloitte for its second quarter CFO Signals report, although their confidence in their own firms weakened. Lower expectations for growth in revenue, earnings, and domestic hiring appear to be behind this.

The survey, which tracks the thinking and actions of over 100 CFOs from large North American companies, recorded a 10th straight quarter of positive net optimism. However, this quarter’s net optimism of plus 18.8 percent is one of the lowest levels in two years and is down significantly from last quarter’s plus 34.4 percent.

Moreover, the percentage of CFOs expressing rising optimism in their company’s prospects fell to 38 percent from last quarter’s 48 percent.

“CFOs are less optimistic about their own companies this quarter, in part due to uncertainty around the condition and trajectory of the U.S. economy,” said Sanford Cockrell III, in a statement. He is national managing partner, Deloitte, and global leader of the Deloitte CFO Program. “The prospect of a pullback in the U.S. economy, possible interest rate increases and high equity valuations are among the most worrisome risks for CFOs this quarter.”

“This quarter’s survey marks a significant shift in CFOs’ expectations for their companies’ performance over the next year,” Greg Dickinson, director, Deloitte, who leads the survey said in a press release. “Although they again voice considerable confidence in the trajectory of North American and other major economies, their declining sales and earnings expectations seem to indicate significant concern about the next twelve months.”  

Cyber-security remains a concern

A significant 65 percent of CFOs also believe U.S. equity markets are overvalued, up from 46 percent in the previous quarter and represents the highest level in a year.

The CFOs also voiced concern over a number of internal and external risks. Those inlcude global economic concerns, rising commodity prices, and the burden of government regulation. Attracting and retaining finance talent remains an issue and more than 70 percent of the CFOs note shortages of skills among staff.

Crisis preparedness is another issue weighing on CFOs this quarter, with cyber-security attacks cited as the most threatening potential crisis. Almost one-fourth of CFOs say they are insufficiently prepared for an attack and only 10 percent feel well-prepared. Technology and Financial Services CFOs feel the most unprepared, with 50 percent and 30 percent citing this concern, respectively. Eighty-five percent of CFOs consider malicious attacks such as terrorism or tampering a major concern, while only four percent feel well-prepared.  

Other findings:

Employees should expect to bear more of rising health care costs. Almost 80 percent of the CFOs say they are managing health care costs by shifting financial responsibility to employees.

Compensation will rise only moderately. Salary and wages are expected to rise 2.9 percent over the next year, with Financial Services highest at 3.6 percent and all other industries at 2 percent or above.

To download a copy of the survey, see: http://www.deloitte.com/us/cfosignals2015Q2 .