Report: Hundreds of CFOs optimistic on the macro outlook

By: Jayson Derrick
Jayson Derrick
Jayson lives in Montreal with his wife and daughter, loves watching hockey, and is on a lifelong quest to perfect the… read more.
on Dec 22, 2020
  • A survey of 300 CFOs pointed to a bullish outlook for 2020.
  • Executives are modeling their company's revenue to grow by nearly 7%
  • However, the assumption is based on a successful rollout of vaccines to combat COVID-19

Just days into 2021, chief financial officers at hundreds of U.S. companies are bullish on the macro environment and expect their businesses to recover in the coming years, The Wall Street Journal reported.

CFO survey

Duke University’s Fuqua School of Business in conjunction with the Federal Reserve Banks of Atlanta and Richmond surveyed around 300 CFOs. On average, the finance bosses are modeling their individual company’s revenue to rise by 6.9% in 2020. This represents a notable uptick from a 2020 outlook of just a 0.3% revenue increase.

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Professor John Graham commented that CFOs are “seeing over the cloud of the pandemic.” Although some of the growth expected in 2021 is “coming from the low base” that was seen in 2020.

The results are roughly consistent with what was seen in similar surveys. The American Institute of Certified Public Accountants noted that 37% of the experts they surveyed expect the U.S. economy to improve over the next year. Among those, 49% expect their company to grow over the same period.

Aside from the macro outlook, some analysts are also trying to forecast crude and Brent oil prices for the start of 2021.

No guarantee of growth

There are no guarantees of economic growth in 2021 and much of the bullish macro outlook depends on the successful rollout of vaccines to combat the COVID-19 pandemic, the professor also said. The CFO community is mostly assuming the vaccine rollout will succeed but even the slightest “snafu” represents “another layer of risk.”

A separate survey of CFOs by accounting and advisory Deloitte found 70% of executives expect a vaccine to jolt the economy forward by the middle of next year.

CFOs worried about tax changes

The Duke survey found that CFOs are concerned President-elect Joe Biden could introduce changes to the tax code and introduce new regulations that will hamper business. The former Vice-President has said he wants to raise the corporate tax rate from 21% to 28%. 

He also wants to introduce new tax laws that slap a 15% minimum tax rate on all firms that generate a profit of at least $100 million and slap higher taxes on income earned by foreign subsidiaries of U.S. corporations, according to WSJ.

On top of that, a Biden administration could impose a new 10% tax penalty on companies that outsource operations outside of the U.S. borders. But on the flip side, his administration would consider a tax credit for businesses that create jobs in the U.S.

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