CFO optimism has declined as Trump’s tariff plans unfolded, according to research

Howard Schneider

WASHINGTON (Reuters) – Optimism among the company’s chief financial officers fell in the first quarter as tariff risks and uncertainty began to cloud the prospects of executives supported by President Donald Trump’s election victory, according to a survey by two Federal Reserve Banks and Duke University.

On the 0-100 scale, the average optimism of around 400 CFOs, with key players in corporate spending, investment and pricing decisions that could affect the direction of the economy fell from a high 66 in the pandemic era at the end of last year to 62.1 in the current quarter.

During the inflation pandemic surge, the index fell by around 50.5, but rose to about 60 before jumping six points after Trump’s election.

Since then, only one sector, construction, has shown optimism. Since then, it has gone from 66.6 to 68. The optimism of CFOs in manufacturing has fallen from 66.6 to 61.6, saying it will support them by taxing imports.

The decline appeared to be linked to the uncertain impact of tariffs and growing concerns about Trump’s efforts to rewire global trade. CFOs now expect growth slower and higher prices than at the end of last year.

“Uncertainty and trade policy were clearly in the hearts of the CFO,” said Sonya Ravindranath Waddell, vice president and economist at the Federal Reserve Bank of Richmond.

“Not only did almost a third of respondents report concerns about tariffs, but these respondents not only noted optimism, lower expectations for GDP growth, lower expectations for revenue and employment growth, and increased expectations for price increases in 2025.”

The CFO survey tracks recent declines in the Conference Committee’s survey on Consumer Sensation. This fell to its four-year low in March, with households scaring both a recession and higher inflation.

(Reporting by Howard Schneider, Editing by Nick Zieminski)