CFO Survey: Uncertainty Slows Spending Plans

Professor John Graham discusses the financial outlook

June 13, 2017


Uncertainty about regulatory policy and health care costs is causing chief financial officers in the United States to hold back investment plans, a new survey finds.

The Duke University/CFO Global Business Outlook found uncertainty about regulatory policy is putting companies in a wait and see mode, putting expansion in general on hold. Health policy uncertainty is seeing some firms hold off on hiring.

The survey has been conducted for 85 consecutive quarters and spans the globe, making it the world's longest-running and most comprehensive research on senior finance executives. This quarter, nearly 750 CFOs responded to the survey, which ended June 9. Results are for the U.S. unless stated otherwise.

"That's enough to significantly dampen growth."

Almost 40 percent of CFOs indicated uncertainty is currently higher than normal. Among those companies, about 60 percent said that uncertainty has caused them to delay new projects and investments.

"If you multiply those two numbers together, it means that current uncertainty is causing nearly 1 out of every 4 companies to delay or cancel plans," said John Graham, a finance professor at Duke's Fuqua School of Business and director of the survey. "That's enough to significantly dampen growth."

Tax Reform

The lack of clarity about if and when tax reform will occur is causing firms to hold off on investment, the survey found.

CFOs said they are anxious for reform that reduces tax rates across the board, for corporations, for pass-through companies, and for individuals," Graham said.

"If companies hold out for three to six months before investing, reform could allow them to immediately expense investment, meaning they might receive a bigger near-term tax deduction versus investing today," Graham said. "So, for a policy that might spur growth in the medium-term, in the short run the lack of clarity on the policy is causing firms to delay investment. Uncertainty about what lies ahead for key trade deals also has a lot of companies in wait and see mode right now."

Optimism Remains Strong

The Optimism Index fell slightly this quarter to 67 on a 100-point scale. That's two points lower than last quarter but still far above the long-run average of 60.

"CFOs remain optimistic not only about the overall economy but about their own firms too," Graham said. "Our analysis of past results shows the CFO Optimism Index is an excellent predictor of the future, especially hiring plans and overall GDP growth."

Hiring plans are stronger than one year ago and U.S. companies expect to pay higher wages, with median wage growth of about 3 percent over the next 12 months, even greater in the construction and tech industries.

Top Concerns

This quarter, for the first time, the top concern among CFOs is difficulty hiring and retaining qualified employees.

"The labor market is tight," Graham said. "Firms are finding it harder to find qualified employees with the skill sets they seek. There are indications of shortages of both management talent and skilled jobs such as diesel mechanics, tech engineers, and sales and service positions."

Other top concerns include health care costs, which are expected to increase by more than 7 percent over the next year; Washington gridlock and, for the first time as a top 5 concern, data security.

Global results

Optimism is up in Europe, only a notch below U.S. optimism. Capital spending will strengthen and moderate employment growth (1.7 percent is expected). Top concerns include economic uncertainty, attracting and retaining qualified employees, followed by governmental regulations and policies. About one in five companies say they are delaying expansion due to uncertainty about regulation and the economy. Shortage of funding and of qualified employees limits the ability to pursue certain value-creating projects (in addition to too much uncertainty about some projects and these projects not being core to the firm).

Optimism is up in Asia, nearly as high as in the U.S. Difficulty attracting employees, currency risk, and falling employee productivity are top concerns. Five percent capital spending and 2.7 percent employment growth expected. About one-third of firms say uncertainty about economic growth and tax policy are greater than normal but few Asian firms are slowing expansion plans in response. Too much uncertainty and overly optimistic projections are primary reasons that some value-creating projects are not always pursued (in addition risk being too high and the project not being core to the firm's strategies).

Latin American CFOs have moderate optimism, up from very low levels one year ago. After dropping 6 months ago, Mexican optimism has almost fully recovered. Still, there are significant concerns about economic uncertainty and weak demand. Business spending will be flat and fulltime employment will fall. More so than other parts of the world, more Latin American CFOs will delay or cancel expansion plans due to economic and political uncertainty. Shortage of funding is the top reason for not pursuing all value-creating projects.

Business optimism in Africa is the lowest in the world. Employment outlook is weak. Biggest concerns are economic uncertainty, volatility of the political situation, and governmental policies. Fifty-five percent say that uncertainty is worse than normal, and among these firms more than half are holding off on expansion in response. Shortage of funding limits ability to pursue value-creating projects (in addition to projects not being core to the firm and scarcity of management time).

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Detailed results, including tabular summaries of the numbers in this release and results from previous surveys are available at

About the survey: This is the 85th consecutive quarter the Duke University/CFO Global Business Outlook survey has been conducted. The survey concluded June 9, and generated responses from nearly 750 CFOs, including 377 from North America, 75 from Asia, 130 from Europe, 120 from Latin America and 41 from Africa. The survey of European CFOs was conducted jointly with TiasNimbas in the Netherlands (, the France CFO society, and at GEM. The survey of Latin America was conducted jointly with Fundação Getúlio Vargas (FGV) in Brazil (, and with Universidad Andina Simon Bolivar in Ecuador. The Japanese survey was conducted jointly with Kobe University ( and Tokyo Institute of Technology, among others. The African survey was conducted jointly with SAICA ( The Chinese survey was conducted jointly with PWC China.
The Duke University/CFO Global Business Outlook survey polls a wide range of companies (public and private, small and large, many industries, etc.), with the distribution of responding firm characteristics presented in online tables. The responses are representative of the population of CFOs that are surveyed. Among the industries represented in the survey are retail/wholesale, mining/construction, manufacturing, transportation/energy, communications/media, technology, service/consulting and banking/finance/insurance. The average growth rates are weighted by revenues or number of employees. For example, one $5 billion company affects an average as much as 10 $500-million firms would. Revenue-weighted mean growth rates are provided for earnings, revenues, capital spending, technology spending and prices of products. Employee-weighted mean growth rates are used for health care costs, productivity, number of employees and outsourced employment. The earnings, dividends, share repurchases and cash on balance sheet are for public companies only. Unless noted, all other numbers are for all companies, including private companies.  

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