The first quarter of 2025 saw a notable decrease in economic optimism among chief financial officers, with the latest CFO Survey pointing to tariffs and market uncertainty as primary drivers.
What Happened: The quarterly survey conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta highlights insights from financial decision makers.
Economic optimism among CFOs dropped to 62.1 in the first quarter of 2025, down from 66.0 in the previous quarter, nearly reversing the post-election surge. While optimism regarding individual firm finances also decreased, the decline was less pronounced.
Trade policy and tariff concerns surged in the first quarter, affecting nearly a third of surveyed firms, a significant jump from the previous quarter. Additionally, ‘uncertainty’ emerged as a top-five concern for the first time.
Firms' Most Pressing Concerns
| CFO Concerns | Q4 | Q1 |
| Trade/Tariffs | 4.10% | 15.20% |
| Inflation | 8.80% | 9.30% |
| Monetary Policy | 10.70% | 8% |
| Labor Quality/Availability | 11.50% | 7.20% |
| Uncertainty | 3% | 6.80% |
| Political Climate | 7.30% | 6.40% |
| Demand/Sales/Revenue | 7% | 6.30% |
| Health Of The Economy | 4.50% | 5% |
| Regulation | 4.20% | 3.80% |
| Non-Labor Costs | 4.20% | 3.60% |
Why It Matters: President Donald Trump‘s inconsistent tariff messages have left investors and businesses uncertain.
Although stocks rebounded after a correction amid hints of possible duty reductions, Trump also revealed upcoming tariffs on pharmaceuticals and automobiles, as well as additional tariffs on buyers of Venezuelan oil and gas. Even though Trump said some countries may be exempt from tariffs investors still await the "reciprocal tariffs" scheduled to be implemented on April 2nd.
"Uncertainty and trade policy were clearly on the minds of CFOs in the first quarter CFO Survey," said Sonya Ravindranath Waddell, vice president and economist with the Federal Reserve Bank of Richmond.
"Not only did almost one-third of respondents report concerns about tariffs, but those respondents had notably lower optimism, lower expectations for GDP growth, lower expectations for revenue and employment growth, and higher expectations for price growth in 2025," she added.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, were mixed in premarket on Wednesday. The SPY was up 0.045% to $575.72, while the QQQ declined 0.018% to $493.37, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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