The CFO Signals survey for North America has been tracking business confidence among CFOs from large corporates in the US, Canada and Mexico every quarter since 2010. This quarter's survey opened just after the US presidential election and it therefore captures how CFOs are expecting business to react and be affected by the Trump presidency.

Optimism shadowed by doubts

The survey results for Q4 2016 show that financial executives expect significant changes to the Affordable Care Act, to corporate tax rates, immigration, infrastructure investments and a rise in national debt. Although not all of these changes will be good for US businesses, 43 per cent of CFOs said they were optimistic about their own companies’ prospects, up from 35 per cent in the previous quarter. However, it is not clear exactly why CFOs remain optimistic overall, since their expectations of revenue are near 'survey lows', according to Deloitte.

Subdued expectations

There were also subdued expectations for earnings growth, capital investment and domestic hiring for their own companies. This might suggest that, while CFOs are encouraged by certain policy changes they think will come about with the new US administration, there remains a lot of doubt about how the economy will actually perform in 2017. However, CFOs are in general more optimistic about the economy: 58 per cent expect better conditions in a year, up from 37 per cent in Q3 2016.

Greater uncertainty about policy

Danny Bachman, senior US economist at Deloitte, said: “The unexpected results of the presidential election have introduced greater uncertainty about policy in areas such as trade, infrastructure spending, taxes, and regulation, with an unusually wide range of possible impacts for business.”

Some of the survey's main findings were:

• 86 per cent of CFOs expect the Affordable Care Act to be significantly modified.
• 66 per cent expect corporate taxes to decline, and 74 percent say repatriation of cash to the U.S. will become more attractive.
• 53 per cent of CFOs foresee meaningful immigration reform legislation.
• 69 per cent of CFOs anticipate substantial new infrastructure investments and overwhelmingly expect the national debt to rise.

Top external risks

The survey also found that the top three external risks CFOs cited in Q4 2016 were:

1. uncertainty about the new administration;
2. a tie between the impact of protectionism on global trade and global growth/recession; and
3. new/burdensome regulation.

This infographic provides more insight into CFO sentiment in the last quarter of 2016: