Corporate Outlook Remains Firm Despite Inflation Headwinds
Corporate finance chiefs entered 2026 with a cautiously constructive macro view, even as tariffs and trade policy remain their top headache for a fifth straight quarter. Average optimism about the U.S. economy ticked up to 61.7 in the first quarter from 60.3 at the end of 2025, according to The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
On their own P&Ls, CFOs expect revenue to rise 5.8% in 2026 and 7% in 2027, only slightly below prior-quarter projections. Price and wage expectations are essentially unchanged, while anticipated unit cost and employment growth have eased, signaling some relief on margins and hiring pressures. The share of firms boosting non-capex spending climbed to 43% from 39.2%, pointing to gradually improving operating confidence.
Macro expectations have also firmed at the margin: CFOs now peg real GDP growth over the next year at 2.1%, up from 1.9%, and assign just an 11.2% probability to negative growth. Equity-market assumptions remain constructive, with “most likely” S&P 500 returns of 6.6% over 12 months and 9.3% annually over 10 years.
Investment and labor plans look steady. About one-third of firms plan to invest in structures and nearly two-thirds in equipment, primarily for replacement and capacity, with roughly a quarter of equipment investors aiming to reduce labor reliance. Most firms continue to hire, mainly replacement roles, while layoffs are rare and typically driven by financial constraints.
“The February employment report might have been soft, but business expectations for both demand and hiring in 2026 held up among respondents,” said Sonya Ravindranath Waddell, VP and economist with the Richmond Fed. “Most firms expected demand to increase in the next 12 months and reported continued hiring, albeit more for replacement than for new positions. Very few firms expected declining demand or a need to lay off workers.”
The survey, which included 473 respondents, was fielded from February 17 to March 5.