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The economy—and businesses—are on the right track to growth, according to a survey of CFOs in a report from Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. In the study, CFOs rated the economy 60.6 on a scale from zero to 100. They rated their own businesses much higher, at an average of 68.5. CFOs are expecting to see both revenue growth this year—the average expectation is 5.8% year-over-year—and a 5% employment increase. These expectations continue into 2025, with CFOs projecting revenues going up 8.1% next year.
“Firms still face many challenges, including a tight labor market and persistent pricing pressures, but there is less concern over a downturn in economic growth compared to previous quarters,” Atlanta Fed economist Brent Meyer said in a release about the report.
This study was done between February 20 and March 8, and the last month and a half have shown some bumps in the road to economic recovery—it’s not clear if that optimism would hold today. But CFOs may have remained positive about their businesses’ prospects, regardless. The figures in the study reflect some stubborn realities of today’s economy. More than half of CFOs said they expect price growth to remain higher than pre-Covid pandemic levels. Additionally, more than half said automation of tasks over the previous 12 months resulted in slower hiring, failure to fill openings and employees being laid off.
With no interest rate cuts expected until July at the earliest and fear that hype over AI technology may send the stock market down, it may take some time to find positive economic news across the board. However, with a keen eye on both the current and future situations, CFOs are in a prime position to predict how smooth the immediate future will be for their own businesses.
ECONOMIC INDICATORS
getty
Tech companies that create anything that touches AI have skyrocketed markets to new heights in 2024. But the “AI bubble” that has buoyed the stock market may be set to burst. Forbes contributor R. Scott Raynovich writes growth expectations and technology investment are uneven and it may be time for hype around the new technology to simmer down. While AI has enormous potential and a few companies have seen sales of their tech infrastructure surge, enterprise technology spending in general has actually decreased at a level that isn’t offset by the new sales.
More proof: Super Micro Computer’s stock tumbled 23% in after-hours trading on Friday because the company didn’t make a pre-announcement of better-than-expected quarterly results. The server manufacturer isn’t scheduled to report quarterly earnings until next Tuesday, but prior to its blockbuster January earnings report, the company stated it expected to exceed existing guidance. Forbes senior contributor Peter Cohan analyzes the market reaction to the report-that-wasn’t, which also cratered Nvidia’s stock about 10% over the weekend. While this is an opportunity for investors to buy Super Micro stock, he writes, it may be showing investors pulling back on the technology until there is much more documented return on investment shown from its implementation.
STOCK MARKET NEWS
A Tesla dealership in Austin, Texas.
Brandon Bell/Getty Images
Tesla reports earnings after markets close today, and analysts and investors are awaiting what Elon Musk’s electric vehicle company has to share. In fact, Wedbush analyst Dan Ives has said this afternoon’s earnings call is “one of the most important moments in the company’s history.” Tesla’s stock price has been moving in the wrong direction all year, down nearly 43% since 2024 began. In January, the company reported a 42% drop in profits, as well as a 9% decline in vehicle deliveries. Tesla has gone on to lay off about 10% of its employees, shift gears to building robotaxis, and put a lot of effort into moving the company’s incorporation out of Delaware so Musk’s oversized compensation package, invalidated by a judge, can be reinstated. According to Forbes senior reporter Derek Saul, earnings reports often cause huge swings in Tesla’s stock price. Since 2022, share prices have swung more than 9% after quarterly earnings seven times. And with investors curious about Musk’s plans for the future, what he says this afternoon could keep the pattern going. “If Musk is flippant again and there is no adult in the room on this conference call, with no answers, then, darker days are ahead,” forecasted Ives.
When online consumer marketing firm Ibotta went public last week, it turned heads by raising $577.3 million—well above its projections at the beginning of its pre-IPO roadshow—before its official debut. Once it hit the open market, its share price surged as much as 17% in its first day. The stock is still well above its IPO price of $88, trading at more than $101 this morning. Ibotta offers users cash back and other rewards for brand and store purchases, and last year made more than $31 million net income with $320 million in revenues. Walmart, which runs several promotions on Ibotta, owns 8.2% of its Class A shares, while Koch Industries has about 15%.
HUMAN CAPITAL
People celebrate at a United Auto Workers vote watching party last Friday after the workers at a Tennessee Volkswagen plant voted in favor of unionizing.
Elijah Nouvelage/Getty Images
The United Auto Workers union is spreading beyond the Michigan area. Workers at a Tennessee Volkswagen plant voted to unionize last week, with 73% voting to join. Workers at that plant had voted down unionization efforts in 2014 and 2019, according to Reuters. However, this unionization effort directly followed a deal that brought record pay increases after a six-week strike for workers at Ford, General Motors and Chrysler and Jeep maker Stellantis. Next month, workers at two Mercedes-Benz plants in Alabama will also vote on union membership.
DEEP DIVE
An unfinished 737 MAX sits outside Boeing’s factory in Renton, Wash.
Elaine Thompson/AP Photo
How Boeing’s Problems Could Disrupt Summer Travel
Airlines had been expecting another strong year of summer travel, but problems at airplane manufacturers have added unexpected turbulence to those plans, reports Forbes’ Jeremy Bogaisky.
This year was supposed to be when Boeing got its production back up to speed—deadly 737 Max crashes in 2018 and 2019 stopped the assembly lines, then the Covid-19 pandemic extinguished much of the demand—but federal investigations related to a door plug that blew out of an Alaska Airlines jet earlier this year have slowed the company’s output considerably. Airbus, the other major airplane manufacturer, has faced its own supply chain issues, particularly with engines. Seven top airlines will be receiving 48% fewer new planes this year than they had initially forecast in 2023.
These issues at the manufacturers are leaving the airlines no choice but to cut back. United Airlines has shouldered quite a bit of the brunt of the manufacturing issues. It expected to receive 127 new planes this year, but is assuming it will only get 66. The company, which already posted an earnings loss due to the FAA-mandated grounding of Boeing 737 Max jets, is reducing its passenger seat capacity for summertime by 4.3%. It’s also paused the opening of two new international routes.
Southwest Airlines also is seeing major issues, with 86 new planes expected and the anticipation of only receiving 20. So far, the airline cut its summer capacity by 1.4%, and announced it would scale back on pilot and flight attendant hiring. More details about Southwest’s impacts and prognosis are likely to be discussed when it releases earnings later this week.
However, Bogaisky writes, it isn’t all necessarily bad news for the airlines. They have older planes to fall back on, though they tend to need more maintenance. And as airlines pull back on the number of flights they operate, planes will become more full, which could lead to more profits.
FACTS + COMMENTS
Express, a fashion retailer that was a staple in the heyday of the shopping mall, filed for Chapter 11 bankruptcy protection this week.
107: Number of stores that will close nationwide, which includes 95 Express and all UpWest locations
$154 million: Losses the company reported for the first 39 weeks of 2023. It has not filed financial reports since then
‘Strengthen our financial position and enable Express to continue advancing our business initiatives’: What CEO Stewart Glendinning said the filing will do
VIDEO
America’s Top 5 Best Banks 2024
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STRATEGIES + ADVICE
Venture capital funding has been difficult to come by in recent years. Here are five tips to make it through these tight times.
ChatGPT can actually provide some decent advice to work smarter and better. Here are five questions to ask the chatbot that could give you tips to cut down your workload.
QUIZ
Netflix reported record profits last week, but analysts and investors did not respond positively. Why?
A. Production delays for the final season of “Stranger Things”
B. There aren’t enough households in the U.S. and Canada to maintain subscription growth rates
C. Subscription prices are scheduled to increase
D. Lack of live sports streaming contracts
See if you got the answer right here.