CFOs are feeling positive about the U.S. economy, according to a recent survey by the Federal Reserve Banks of Richmond and Atlanta. Top financial leaders are predicting GDP growth of 1.7% in 2024.
That’s a notable jump from CFO sentiment measured back in August, when the 400 CFOs surveyed alongside Duke University’s Fuqua School of Business expected GDP to rise by just 1.3%.
Even with this renewed optimism, financial leaders are still cautious as 2024 approaches. For example, the Atlanta Fed recently reported Q4 2023 GDP growth at 2% as of January 2, which is a step down from the 2.3% forecast shared on December 23.
While Q4 GDP growth remains solid—though slightly below expectations—many unpredictable factors will keep uncertainty high in 2024. Geopolitical tensions, for instance, could continue to disrupt global supply chains.
Another key challenge is the Fed’s tightening policy. Since March 2022, central bank interest rates have climbed from near zero to between 5.25% and 5.5%. This creates headwinds for businesses looking to refinance debt, as higher interest costs could slow their growth.
Inflation is also putting pressure on budgets. Sixty percent of respondents expect prices to stay above pre-pandemic levels in 2024. As a result, many plan to keep spending tight in hopes of boosting revenue.
Staying optimistic in uncertain times
“The likelihood that companies expect a decline in economic activity has dropped significantly since the start of last year,” said Sonya Ravindranath Waddell, vice president at the Richmond Fed, in the joint report with the Atlanta Fed and Duke.
On average, CFOs expect revenue to grow by 5% this year, and payrolls to rise by 2.7%—up from the 2.23% increase seen in 2023.
In fact, a separate analysis of the S&P 500 forecasts year-over-year earnings growth to reach 11.8% in 2024—a big leap from the 10-year average of 8.4%.
Will this business optimism benefit startups too?
While these results are encouraging for established companies, startups face bigger hurdles in an unpredictable economy than S&P 500 giants.
Large enterprises often have the cash reserves to tighten spending, but early-stage, pre-revenue startups rarely have that option—they need to invest to fuel their innovation.
Still, founders at every stage should share in this optimism as they plan for 2024 and beyond. After all, a rising tide lifts all boats. As the broader economy improves, innovative startups will find even more opportunities to grow.
Non-dilutive funding is more important than ever
To navigate today’s challenging funding environment, startups should diversify their capital strategy and structure their business to prioritize innovation and R&D.
By focusing on breakthrough innovation, startups can unlock a range of funding options—including the valuable R&D tax credit, which lets companies recover a portion of their annual product development costs.
At Boast, we work with thousands of startups and founders across North America to secure R&D tax credits and explore non-dilutive funding opportunities. Connect with an expert today to see how we can help you maximize your claim and realize the full value of your R&D.
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