CFOs Remain Optimistic for 2024
CFOs call the shots on costs, particularly labor .
CFOs remain largely optimistic about their economic trajectory as they plan for the last quarter of 2024, according to The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
Despite increased concerns around the health of the overall economy and some uncertainty related to the upcoming election, respondents said they still expect employment and revenue growth in the third quarter. In the survey that closed on Sept. 6, about 450 financial executives reported little change in optimism about the economy or about their own firm prospects.
CFOs sees revenue growth above 7% in 2025 up from ~5% in 2024 with prices nearly stable at +4% and wages up 5%+. No dot plot believers in there.
In the most recent CFO Survey, we explore the extent to which firms noted that election-related uncertainty has impacted their investment plans. We find that 30 percent of respondents reported having “postponed,” “scaled down,” “delayed indefinitely,” or “permanently canceled” their investment plans because of this uncertainty — slightly higher than the 28 percent expressing similar views last quarter. Additionally, a larger share of firms took more than one action with respect to pulling back their investment — suggesting an impact on investment plans that spanned more dimensions than in the prior survey.
This is not only about large companies. While CFOs have somewhat lowered their expectations for 2025, they show broad optimism for the economy and their own company.
Oil Extends Sharp Drop on Prospect for More Saudi, Libyan Supply Saudi Arabia ready to abandon $100 crude target, FT reports
Oil fell for a second day as Saudi Arabia was reported to be committed to increasing output in December, while factions in Libya reached a deal that could open the way to the return of some crude production.
Brent dropped below $72 a barrel for a loss of almost 5% since Tuesday’s close, while West Texas Intermediate was near $68. Saudi Arabia is ready to abandon its unofficial oil price target of $100 a barrel in a bid to regain market share, the Financial Times reported, citing people familiar with the country’s thinking. (…)
The International Energy Agency has said that global oil markets will be oversupplied next year with or without extra OPEC+ supplies, thanks to a surge in output from outside the group.
“There is no room for more OPEC+ oil on the market if the cartel wants an oil price close to $80 in 2025,” analysts at A/S Global Risk Management said in a report. “We assess that the Saudis are trying to put significant pressure on the quota cheaters.” (…)
Saudi Arabia has never given a price target but has often indirectly linked its market share and budget objectives.
If true, we could be set for weak, maybe weaker, oil prices for an extended period.
The group’s Joint Ministerial Monitoring Committee will next meet on 2 October, while a full OPEC+ meeting is scheduled for 1 December where ministers are set to discuss 2025 policy.
China Pledges More Support for Economy Move comes days after the central bank unveiled a raft of aggressive easing measures
The Politburo, China’s highest decision-making body, on Thursday said it would extend additional fiscal and monetary measures to boost the economy, according to state media Xinhua. That comes days after the central bank unveiled a raft of aggressive easing measures, underscoring a rising sense of urgency among policymakers to revive the world’s second-largest economy.
Senior leadership, including leader Xi Jinping, vowed to reach the country’s annual economic goals, urging officials to implement existing policies more effectively and roll out new ones.
“Supportive policies, one after another, aren’t pure coincidence,” economists at HSBC said in a note. “It feels like Beijing is now ‘striking while the iron is hot.’”
Officials also promised to prevent further declines in the housing sector and to adjust home-purchase curbs, a move economists say might pave the way for bolder property-rescue measures in China’s major cities.
That marks the first time since the downturn began that the Politburo has explicitly targeted a property-market rebound, economists at Capital Economics said in a note.
Thursday’s gathering was unexpected as the decision-making body typically discusses economic policies at its April, July and December sessions and has rarely deviated from that schedule. (…)
“With households deleveraging and many private firms cautious about borrowing, monetary policy has lost much of its effectiveness in China,” said Julian Evans-Pritchard, an economist at Capital Economics. (…)
But previous rounds of policy efforts have disappointed, and details about what sort of fiscal firepower China plans to deploy are lacking. “It’s difficult to judge the scale of any additional fiscal support at this stage,” Evans-Pritchard said in a note on Thursday.
Muted effects from previous rounds of policy easing back the view that public spending needs to be ramped up to address weak domestic demand—the real bottleneck to growth. But Beijing has shown little appetite for aggressive borrowing despite mounting headwinds to its annual growth target of around 5%.
On a regional level, local governments—which shoulder most of the nation’s fiscal expenditure—have turned more frugal as income from tax collections and land sales dries up. Many have cut spending under Beijing’s debt-resolution mandate.
Amid revenue shortfalls and lagging bond issuance, China’s general government expenditures fell 2% for the January-July period, Citi economists have estimated, an even sharper drop than during the pandemic.
“De facto fiscal austerity is the primary source of downside growth surprises this year,” the Citi economists said in a note. Escaping the “austerity trap” will require a pragmatic rebalancing of debt controls from risk resolution to supporting growth, they added.
As tax revenue drops, Beijing may be forced to take on more debt. Standard Chartered economists have estimated that up to $142 billion in additional bond issuance is needed for the government to fill its budget gap.
More spending is likely also needed to help digest China’s vast stock of excess housing inventory, a key obstacle to stabilizing the property sector. Estimates from Nomura economists put the funding gap represented by the millions of delayed units of presold homes at over $400 billion. (…)