Key Takeaways

The proportion of CFOs expressing optimism for their companies' financial prospects rose to 32% from last quarter's 20%. Their appetite for greater risk-taking jumped to 40% this quarter, up from last quarter's 29%.
A vast majority (93%) of surveyed CFOs have their finance organization focused on planning for a mild recession.
Nearly two-thirds (65%) of CFOs expect inflation in the United States to range between 4% and 6% by the end of 2023.
More than half (54%) of CFOs see the North American economy improving over the next 12 months.
The top three actions CFOs are taking to prepare for an economic recovery are investing in growth, sales, customers and new markets; controlling cost/increasing operational efficiency; and building inventory/production capacity to meet demand.
More than half of CFOs pointed to inadequate technologies/systems, immature capabilities, and lack of experienced talent as their greatest obstacles in driving data to insights.
Why it matters to CFOs?
Each quarter, CFO Signals™ tracks the thinking and actions of leading CFOs representing North America's largest and most influential companies. Since 2010, the survey has provided key insights into the business environment, company priorities and expectations, finance priorities and CFOs' priorities. Participating CFOs represent diversified, large companies, with 78% of respondents reporting revenue greater than $1 billion. Slightly less than one-quarter (22%) are from companies with greater than $10 billion in annual revenue.

Economic outlook
CFOs' sentiment toward current conditions rose across the five economic regions covered in the CFO Signals survey, except South America. For North America, 40% of CFOs rated the current economy as good or very good, up from 35% in 4Q22. More than half (54%) of CFOs expect conditions in North America to improve in a year, up measurably from 29% last quarter.

CFOs' economic outlook also improved for the other four regions. Five percent of CFOs view the economy of Europe as good or very good now, an increase from 2% in 4Q22. Nearly a third (32%) of CFOs anticipate better conditions in a year, compared to 9% in 4Q22. Similarly, 6% of CFOs view the current economic conditions in China favorably, and 41% anticipate better conditions in a year. The percentage of CFOs who view the current economy of Asia, excluding China, favorably rose to 22% from last quarter's 15%, and 32% of CFOs expect conditions to improve in a year. While CFOs' sentiment toward current condition in South America declined slightly, it improved for the future outlook, to 17% from 8% last quarter.

Own company optimism and risk
The percentage of CFOs feeling more optimistic for their companies' financial prospects rose to 32% from 20% in the prior quarter. This figure is the highest it has been since the 2Q22 survey. The proportion of CFOs saying now is a good time to take greater risks jumped to 40% from 4Q22's 29%.

Inflation and geopolitics/political instability stood out for the second consecutive quarter as CFOs' most pressing external risks. Talent retention, along with talent availability and hiring talent, once again led their internal list of worries, followed by prioritization and execution.

Key operating metrics
CFOs raised their year-over-year growth expectations for revenue, earnings, capital investment and domestic hiring. Growth expectations for dividends and domestic wages/salaries fell this quarter. Revenue growth increased to 4.4% from 4.2%, earnings growth rose to 5.4% from 2.9%, capital investment growth expectations climbed to 5.7% from 4%, and expectations for domestic hiring growth increased slightly to 2.3% from 2.1% last quarter. CFOs lowered their expectations for domestic wages/salary growth for the second consecutive quarter to 4.3% from 4.6%, and growth expectations for dividends fell to 2.4% from 3.1%.

Recession planning and inflation expectations
The vast majority (93%) of surveyed CFOs indicated that their finance organizations are focused on planning for a mild recession. Fifty-five percent of surveyed CFOs indicated they are satisfied with their companies' decision-making to prepare for a downturn or recession. More than half (53%) also reported satisfaction with their companies' decision-making for a recovery/rebound.

CFOs who think there will be an economic recovery or rebound are taking action to prepare. The top three actions CFOs reported include: investing in growth, sales, customers and new markets; controlling costs/increasing operational efficiency; and building inventory/production capacity to meet demand.

Regarding inflation, nearly two-thirds (65%) of CFOs expect inflation in the U.S. to range between 4% and 6% by the end of 2023, indicating continued concern over inflation's persistence.