DURHAM — Chief financial officers (CFOs) and other financial decision-makers are putting on a brave face, but they still can’t hide their concerns over the economic fallout from COVID-19, according to the results of a new survey released today.
The CFO Survey, a new collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, was conducted from June 15-26 among financial decision-makers in firms of varying sizes and across industries.
Respondents’ most common concern was around their own firms’ sales/revenues and customer demand.
On average, firms expected revenue to decline 2 percent in 2020, but grow 7 percent in 2021.
This pessimism about 2020 was corroborated by firms’ low expectations for gross domestic product (GDP) growth; almost 40 percent of firms expected GDP growth to be negative for the calendar year 2020.
“Firms continued to express concerns around the shape and strength of the recovery — for their firms, their industries, and their customers,” said Brent Meyer, policy advisor and economist at the Federal Reserve Bank of Atlanta, in a statement. “The comments from CFOs and financial decision-makers from firms across industries indicate that the COVID-19 pandemic has dramatically affected their views of the U.S. economy and the financial prospects of their firms.”
In spite of these worries, CFOS remain optimistic, according to survey responses.
When participants were asked to rate their optimism for the financial prospects of their firms on a scale of 0 to 100, the average optimism rating was 70, an improvement from the first quarter (60) and close to the average for the past several years.
When asked to rate their optimism about the overall U.S. economy from 0 to 100, the average rating was 60 — also an improvement from 51 in the first quarter, which was conducted from the beginning of March through the beginning of April in 2020.
About half of firms applied for new credit in the last six months, the survey showed. Although most firms that applied for credit reported that it was more difficult to access credit, almost all of them received loan amounts at or near the amount requested.
In addition, almost all responding firms with fewer than 500 employees applied for funding from the U.S. Small Business Administration’s Paycheck Protection Program.
“PPP funding has been an important part of the survival mechanism that firms have employed in the last few months,” said Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond. “The fact that almost all of the firms who reported taking PPP funding anticipate a full forgiveness of the loan is one positive indicator for employment as policymakers try to anticipate the trajectory of the recovery.”
The CFO Survey is issued by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.