Good morning.
Most CFOs are confident that the U.S. will avoid a full-blown economic downturn. Just 8% of finance chiefs strongly agree there will be a recession in the next six months.
“CFOs have spent, I would say, the better part of the COVID crisis and beyond really anchoring scenario planning, shoring up their balance sheet writing, and their cost structure,” Wes Bricker, U.S. vice chair and trust solutions co-leader at PwC, said during a media call on Monday. “I think that gives them optimism across multiple scenarios that they'll help guide the company to financial success.”
This morning, PwC released a new report based on a survey of more than 600 U.S. C-suite leaders (including CFOs, CHROs, COOs, CTOs, CIOs, CROs, and CMOs). Overall, just 17% of executives strongly agreed that there will be a recession in the next six months, down 35% from October 2022. However, 27% of chief operating officers (COOs) think there will be one in the next six months.
COOs are focused on the complexity of transformation—from customer experience to the workforce to risk functions, Bricker said. “I think what we see in the data is that COOs are looking at multiple scenarios around the transformation work with a bit more caution than the chief financial officers who feel ready to allocate capital to invest in the future,” he said.
Although most of the execs think the odds of a recession may be lower, 27% view an uncertain macroeconomic environment as a serious risk to their company, according to the findings. Meanwhile, cyberattacks were the top-cited risk, with 36% of respondents saying it's a serious risk to their company, and 38% saying it’s a moderate risk.
Growing with tech
Other themes that came across in the survey are prioritizing investments in technology, and investing in the workforce, Neil Dhar, U.S. vice chair and consulting co-leader at PwC, said on the call. The C-suite leaders are focused on three things, Dhar said: “How do they grow their companies? How do they operate with more efficient operating models? And how do they balance risk and compliance? And that’s all underpinned by technology.” The leaders said integrating advanced technologies in their businesses in the next 3–5 years is a high priority.
I recently had a conversation with Walmart EVP and CFO John David Rainey who said he envisions that five years from now Walmart will have the ability to forecast customer demand. "Technology is one of the biggest investments that we have been making," Rainey said.
Fifty-nine percent of the PwC survey respondents said they will invest in new technologies in the next 12–18 months. And 46% specifically pointed to generative A.I. In terms of use cases for generative A.I., “industries such as financial services, pharma, life sciences, and consumer markets seem to be leading the charge within specific functions, such as customer operations, sales and marketing, software writing, and research and development,” Dhar said. But challenges to companies’ ability to transform include achieving measurable value from new tech (88%), the cost of adoption (85%) and training talent (84%).
And 89% of CFOs said striking the right balance between cost cutting and investing for growth is a top challenge to transformation. However, finance chiefs are still focused on prioritizing investments in new capabilities, like generative A.I., to move the company forward.
Sheryl Estrada
sheryl.estrada@fortune.com
