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Deloitte: CFOs optimistic, but hiring shortages, inflation, return to work fan economy concerns

·4 min read

Executive optimism about the U.S. economy is soaring, according to new data from Deloitte, fueled by vaccine rollouts that are bolstering the recovery and helping to ease workplace restrictions.

However, concerns about hiring and surging prices are bubbling beneath the surface, the survey revealed.

Deloitte’s second quarter CFO Signals survey, which took over 100 of North America’s top executive officials, found that 75% of CFOs view our economy “as good or very good,” skyrocketing from 29% recorded during the first quarter.

“We’re seeing increasing optimism across the board from CFOs,” Steve Gallucci, Deloitte’s North America leaders of the CFO program, told Yahoo Finance in an interview.

A slim 3% rated conditions as “bad” compared to 13% in the first quarter, yet those expecting better conditions in a year tumbled to 62%, from 73% in the first three months of the year.

Despite record levels of stimulus funding and positive vaccine rollout strides, Deloitte found a major turnaround in annual revenue expectations compared to the same quarter last year, which jumped from 8.5% to 9.6%, reaching the highest level in over a decade.

However, among the 138 CFOs it surveyed, the firm found widespread anxiety about the outlook for hiring, and spiking inflation that’s fanning concerns about the recovery’s staying power.

According to Deloitte, recruitment, retention, skills development and the availability of workers “ranked as CFOs’ chief internal concern, followed by execution and growth.”

In addition, finance chiefs “cited economic stability and inflation most frequently as their most worrisome external risk, followed by potential changes in government policies and resurgence of COVID-19,” the report added.

'Jobs crisis'

A store advertises a Help Wanted sign in Annapolis, Maryland, on May 12, 2021. - US consumer inflation surged 4.2 percent last month compared to April 2020, the Labor Department said May 12, 2021, posting the biggest year-on-year increase since 2008 as the economy recovered from the pandemic. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
A store advertises a Help Wanted sign in Annapolis, Maryland, on May 12, 2021. - US consumer inflation surged 4.2 percent last month compared to April 2020, the Labor Department said May 12, 2021, posting the biggest year-on-year increase since 2008 as the economy recovered from the pandemic. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)

The survey’s findings mirror the escalating worries at multiple levels of the economy, as large and small U.S. businesses scramble to find workers as re-openings feed demand. 

For various reasons, millions of workers appear hesitant to take jobs because of the enhanced weekly unemployment benefits or not enough affordable child care. Yet CFOs see the ability to hire and retain quality talent in the workplace as a roadblock to recovery.

"It's clear the pandemic is still creating problems" in the labor force, Stephen Lamar, CEO of American Apparel and Footwear Association (AAFA) told Yahoo Finance Live last week. "We're looking to hire more people, and not finding workers to fill those jobs. This certainly is a jobs crisis that's being perpetuated."

Even after jobless claims hit a pandemic-era low, hiring and return-to-office concerns loom large over the outlook. Employees are ramping up plans to lure workers back to offices, but are offering flexible schedules to allay worker concerns.

“There is certainly some uneasiness about the pivot back to the office,” Deloitte’s Gallucci explained to Yahoo Finance.

When the pandemic hit last March, companies had to adopt a fully virtual workforce to comply with public health guidelines. But now, leaders “recognize the future state is probably some type of a hybrid solution,” he added.

Deloitte’s findings dovetailed with a separate study that showed about 70% of CFOs and other executives are also optimistic about economic prospects over the next year, according to the American Institute of Certified Public Accountants (AICPA)’s economic outlook survey.

The AICPA report credited the optimism to companies expecting things to open up more in the second half of 2021. In addition, executives expect profits to rise by 4%, and revenues are anticipated to rise 5%.

As racial and gender equality become a bigger emphasis for Corporate America, Deloitte also found that a growing number of CFOs expect to ramp up diversity, equity and inclusion (DEI) programs, aimed at reducing the economic opportunity gap in communities of color.

Nearly 72% of CFOs say their companies have a formal DEI strategy, up from 67% when the similar question was raised in 2019, Deloitte said.

“We clearly see a trend in the right direction,”said Gallucci. “We would probably look to see those numbers increase in the next couple of quarters but focus on DEI.”

While the US economy returns to pre-COVID levels, the same sentiment for China, where 62% of those surveyed rate the economy as good, and 53% expect the world’s second-largest economy to be “better” in a year.

However, in Europe — where the economy is under threat from slow vaccine rollouts and extended lockdowns — things don’t look nearly as hopeful as abroad. Only 19% of those asked felt Europe was good now, while 46% see the conditions improving in a year.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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