Chief financial officers are more upbeat about the US economy in the fourth quarter than they were in the third, according to The CFO Survey released by the Federal Reserve Bank of Richmond, Virginia. Their expectations for job growth ahead were described as “solid.”

“The probability that firms assigned to a decline in economic activity has fallen considerably since the beginning of the year,” Sonya Ravindranath Waddell, VP and economist with the Federal Reserve Bank of Richmond, said in a press release. “Which, combined with the increase in optimism, is a positive development for the business outlook for 2024.”

When asked to rate optimism about the overall US economy on a scale of zero to 100, the average rating from CFOs in this quarter was 58.0. That’s up from the average rating of 56.2 in the third quarter.

CFOs were also optimistic about their own firms’ prospects, giving them an average rating of 67.3 in this quarter, though that’s down from 67.8 in the third quarter.

The CFO Survey report also noted employment and revenue expectations remain “solid” for 2024:

• Median expected employment growth stands at 2.7% for next year. That’s up from 2.2% forecast in the third quarter.
• In terms of revenue, median revenue growth is expected to remain steady at 5% next year.
• Median price and unit costs growth are expected to slow from 5% for both this year to 3% and 4%, respectively, in 2024.

“Expectations for compensation growth also remain above what firms consider normal,” Waddell said.

There were indications that firms were cutting back — for example, the share of firms that reported increased spending continued to shrink. In addition, 79% of respondent firms — and 90% of large firms — have existing debt, much of which is expected to come due in the next few years. And firms that intend to roll over their debt are facing higher interest costs. The report says this suggests there could be some headwinds to economic growth next year.

On the other hand, respondents’ average expectation for GDP growth over the next four quarters is 1.7%, up from 1.3% in the third-quarter survey.

The report is based on The CFO Survey panel with 2,100 members as of Dec. 1. It is a collaboration of the Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business.