CFOs see US economy improving from coronavirus pandemic, but cite need for more stimulus
70% of CFOs said they expect COVID-19 vaccine to bolster US economy by mid-2021
Most American CFOs anticipate the U.S. economy will continue to heal from the coronavirus-induced downturn next year, but they believe Congress needs to pass another round of emergency aid to juice the recovery.
Nearly 70% of CFOs surveyed by the Deloitte Global CFO Program Leader said they expect a COVID-19 vaccine to bolster the economy by midyear, with close to two-thirds saying they expect strong consumer spending in 2021, and 63% forecasting strong business spending.
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Pfizer, a drugmaker that has said in news releases its vaccine is safe and 95% effective, has said it expects to have produced enough doses for 25 million Americans by the end of 2020, while Moderna, another drugmaker that has said its vaccine is safe and close to 95% effective, has said it expects to produce enough for more than 20 million individuals in the U.S. market.
Both companies still need to receive FDA approval.
"News of an effective vaccine seems to be driving a general belief that, despite a grim outlook for winter virus infections, broader vaccine availability later in the year provides a light at the end of the proverbial tunnel," the Deloitte study, published Wednesday, said.
While just 18% of CFOs said they would rate the North American economy as good, 59% said they expect better conditions next year. That's up from last quarter when 7% ranked the economy as good last quarter and 43% said they believed the economy would improve over the course of the next year.
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Nearly 60% of CFOs said they're more optimistic about their company’s prospects now than they were three months ago. Still, close to two-thirds of CFOs said they don't expect to return to pre-crisis operating levels until the latter half of 2021 or later. More than one-quarter don't believe they'll get to that point until the first quarter of 2022.
In order to boost the economy, most CFOs agree that Congress needs to pass another coronavirus relief package before the end of the year: 42% of respondents said that a large and comprehensive stimulus deal -- in line with the $2.2 trillion CARES Act -- is needed to drive the recovery. About 62% of CFOs said they believed that a smaller, more targeted aid package would be effective.
"CFOs indicate a bias toward a smaller, targeted stimulus package over a large, comprehensive package like the CARES Act," the Deloitte study said.
For months, Congress has struggled to reach an agreement over another round of emergency relief for families and businesses still reeling from the pandemic, divided sharply over the size and scope of such a measure.
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A $908 billion compromise bill unveiled last week by a group of bipartisan senators has started to gain traction among lawmakers, with key Democratic leaders endorsing the framework.
The proposal allocates about $300 billion in funding for small businesses through the Paycheck Protection Program, $240 billion in aid for state and local governments, $180 billion to extend boosted unemployment benefits at $300 per week through March and includes liability protections for businesses that remain open during the pandemic.
It would also funnel $16 billion into vaccine distribution, testing and contact tracing, put $82 billion into education and give $45 billion for transportation. The bill text has not been finalized yet.