30% of CFOs Are Considering Layoffs and Most Expect a Recession
But two-thirds say they’ll meet their growth projections and 61% expect higher profits.
A new survey of 249 U.S. CFOs, this time by Grant Thornton, conveys a “best of times, worst of times” vibe, with 72% expecting interest rate hikes to create a recession.
Over the next six months is when the doom and gloom settle like the opening of a mediocre English murder mystery. Only 39% of those responding had a positive outlook for the nation’s economy and 30% are considering layoffs. Not good news for the CRE office segment, which is already under pressure from trying to understand what space use will be like going forward.
Specifically, pessimism comes from concerns over higher energy costs, supply chain problems, interest rate hikes, and higher costs of credit and capital.
There is also a potential secondary effect from playoffs. “Be careful,” warned Tim Glowa, a principal and leader of Grant Thornton’s employee listening and human capital analytics services, in the company’s release, “because the impact of layoffs or other cuts to the employee value proposition can linger for employers. Companies that were quick to cut headcount at the beginning of the pandemic suffered in the intense competition to rebuild workforces during the recovery.”
When things improve, companies that went too hard into preventative measures like major layoffs could find themselves unable to catch up in a timely fashion, slowing business and their need for space even more.
But that’s one side of the CFO and corporate puzzle. The other is a true flip side. Cash and liquidity jumped from 19% in Q1 to 31% in Q2. And 65% of CFOs think that the impact of Covid-19 is “waning” (although remember the CDC says it’s still the third largest cause of death in the U.S.). Also, 66% think their companies will meet growth goals while 61% expect to increase profits.
The top three concerns of CFOs are cybersecurity (41%), supply chain (37%), and remote workforces (32%). Supply chain is important because while CFOs think customer demand is there, they worry that difficulty in meeting supply could cost them.
“Yet while cash concerns may not be shocking, many leaders may be surprised to see remote-workforce issues rank third on the list of concerns,” said the report. “According to Grant Thornton leaders, there are multiple factors fueling this concern: the confusion over how much office space is needed; a planned increased investment in training; and potential layoffs.”