Optimism Among CFOs Falls Amid Concerns about Tariffs, Uncertainty
Optimism about the economy among CFOs fell in the first quarter of 2025 amid concerns about tariffs and uncertainty, according to the latest CFO Survey.
The economic optimism index fell from 66.0 in the fourth quarter to 62.1 in the first quarter of 2025, almost erasing gains from a post-election jump in the fourth quarter. Optimism about their own firm’s financial prospects also fell, although not nearly as much.
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CFO Survey data from Q2 2020 to Q4 2024 have been revised in accordance with an annual revision process. Revised historical data are available for download. Comparisons of revised and previously published estimates are also available.
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CFO Optimism
The economic optimism index fell from 66.0 in the fourth quarter to 62.1 in the first quarter of 2025, almost erasing gains from a post-election jump in the fourth quarter. Optimism about CFOs’ own firm’s financial prospects also fell, although not nearly as much.
CFOs’ Most Pressing Concerns
Almost a third of responding firms reported being concerned about trade policy or tariffs in the first quarter—a sharp increase from the fourth quarter. In addition, “uncertainty” made it to the top five concerns for the first time.
CFOs’ Expectations for Their Firms’ Performance
Employment growth expectations fell, but expectations for revenue growth, unit cost growth, wage growth, and price growth were relatively steady from last quarter.
| CFOs' Growth Expectations for Their Own Firms, by Response Quarter | Q1 2025 | Q4 2024 | ||
|---|---|---|---|---|
| Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years | 2025 | 2026 | 2024 | 2025 |
| Revenue | 6.8% (5.0%) |
7.2% (5.0%) |
5.4% (4.0%) |
7.0% (5.0%) |
| Price | 3.5% (3.0%) |
3.4% (3.0%) |
3.1% (3.0%) |
3.4% (3.0%) |
| Unit Cost | 3.9% (3.5%) |
3.5% (3.0%) |
3.7% (3.0%) |
3.7% (3.0%) |
| Employment (full-time) | 2.5% (1.1%) |
3.0% (1.7%) |
4.6% (1.9%) |
3.5% (2.4%) |
| Average Wage | 4.2% (4.0%) |
4.1% (3.5%) |
4.2% (4.0%) |
3.9% (3.5%) |
| Note: Q1 2025 data in the table reflect results for 345 to 390 U.S. firms responding to the Q1 2025 survey (February 18 – March 7, 2025). Results from the Q4 2024 survey (October 21 – November 19, 2024) are shown for comparison (for 471 to 512 firms). Revenue, Price, and Unit Cost are weighted by sales revenue. Employment and Average Wage are weighted by employment. These data are also winsorized at 5% to remove the potential influence of extreme values. | ||||
The share of firms that increased spending (excluding capital expenditures) in the past three months declined slightly from the previous quarter.
CFOs’ Expectations for the Aggregate Economy
CFOs revised downward their expectations for real GDP growth over the next four quarters to 1.9 percent from 2.2 percent in the prior survey. Moreover, the probability respondents assign to negative year-ahead economic growth rose to 14.2 percent from 8.5 percent last quarter.
| CFOs' Expectations for Real GDP Growth Over Next Four Quarters, by Response Quarter | Q1 2025 | Q4 2024 |
|---|---|---|
| Weighted Mean | 1.9% | 2.2% |
| Weighted Median | 2.0% | 2.3% |
| Probability of Negative Growth | 14.2% | 8.5% |
| Note: Q1 2025 data in the table reflect results for 368 U.S. firms responding to the Q1 2025 survey (February 18 – March 7, 2025) and that indicate they are familiar with Gross Domestic Product (GDP). Responses are weighted by sales revenue. | ||
| Expectations for Stock Market Performance, by Response Quarter | Q1 2025 | Q4 2024 | ||
|---|---|---|---|---|
| Expected Annual S&P 500 Returns Over Next 12 Months and Next 10 Years | 12 Mos (N=280) | 10 Yrs (N=280) | 12 Mos (N=358) | 10 Yrs (N=372) |
| Worst Case (a 1-in-10 chance the actual return will be less than): | -3.5% | 3.6% | -2.7% | 3.6% |
| Most Likely Case | 6.1% | 9.7% | 7.2% | 9.7% |
| Best Case (a 1-in-10 chance the actual return will be greater than): | 12.4% | 14.5% | 13.5% | 15.2% |
| Note: The table shows responses from firms that indicated they closely follow the stock market. Results from the Q4 2024 survey (October 21 – November 19, 2024) are shown for comparison. Responses are unweighted and winsorized at 5% to remove the potential influence of extreme values. Please see The CFO Survey Methodology for further information. Source: Duke University, FRB Richmond and FRB Atlanta, The CFO Survey – Q1 2025 (February 18 – March 7, 2025) | ||||
Semiannual Questions on Investment
The first quarter CFO Survey included a semiannual investment module to ask participants about their recent structures and equipment investment decisions. The share of firms planning investments over the next six months edged slightly lower compared to the third quarter of last year.
Special Questions on Hiring and Capital Spending
About a quarter of firms reported that changes to trade policy would negatively impact their hiring and their capital spending plans in 2025. Next to tariffs and trade policy, changes in regulatory policy seemed most likely to affect hiring and capital spending plans, both positively and negatively. Only a few firms reported altering plans due to changes to immigration or corporate tax policy.
For additional discussion of these results, visit our Research & Commentary section.
Special Questions on the International Trade Environment
When asked whether they had taken certain actions due to the current international trade environment, almost 30 percent of firms said they planned to diversify supply chains, 20 percent moved up purchases, and there were some reports of finding new domestic or foreign suppliers.
For additional discussion of these results, visit our Research & Commentary section.
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