The chief financial officers of North America’s largest and most influential companies are optimistic about the state of the world economy following the latest U.S. tax and spending bills, according to a new survey of first-quarter sentiment.
According to Deloitte’s quarterly CFO Signals Survey, which tracks the thinking and actions of these CFOs, 90% rated the current conditions as good, a new survey high. This compares to 74% in the fourth quarter. The survey also found that 59% expect better conditions in a year.
Meanwhile, as interest rates have increased, CFOs’ perception of financing is decreasing. Seventy-seven percent of CFOs say debt financing is attractive, down from 85%, and the attractiveness of equity financing decreased for public company CFOs to 43% from 46%, and for private company CFOs to 35% from 47%.
Seventy-six percent of CFOs now say U.S. equities are overvalued, but that is down from last quarter’s survey high of 84%.
The CFOs said their biggest concerns are securing the talent they need and politics and policy, particularly trade policy.
When asked about how the U.S. tax law changes will impact their companies, they said they expect tax reform will increase their domestic investment, hiring and wages and many also expect accelerated earnings repatriation, the transfer of offshore profits being returned to corporations' home country. When it comes to what to do with their repatriated cash, the more extensive use will be for debt repayment, share buybacks and dividends, while many will use some of this cash for hiring and pay hikes.