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Viewing the results of our poll, one CFO of a staffing company offered his unique insight based on his business. “When companies get more confidence to expand their workforce again, they typically lean heavily into temporary staffing, initially,” he said. “With more confidence, they expand into permanent placement. What I would tell you is: we’re still seeing very cautious employers. … The big, conflicting source of all this is the labor market. Every month continues to surprise people with how strong it is compared with what we hear from employers.”
For Daco, this affirms the enduring value of talent, which grew scarce in the fallout from COVID-19. “We have a hiring rate that has fallen down to 2018 levels,” he noted. “But we haven’t seen significant or broad-based layoffs — there’s much more retention.” This highlights how companies are reluctant to cut talent but have to manage the higher cost of labor.
Some CFOs affirmed that their sectors, such as technology, remained soft. “We’re facing deferred spending and projects,” one said. “Our clients have more of a focus on short-term ROI. That’s been for a year or more. Besides the public sector, spending in tech has been challenging. We’ve pulled back on headcount after significant hiring post-pandemic. We’re in a mode now to hold the line, drive efficiencies and scale opportunities to begin to hire a bit more for the turn of the cycle.”
While inflation has moderated, CFOs felt that the market may also be strained by cost fatigue. “You have pressures from inflation broadly and whether people can borrow money,” one CFO of a restaurant chain said. “But the other side, because costs increased and companies raised prices, you now have high prices for consumers where there now are heavy discounts. You’re so high even from two years ago — you can have temporary promotions, but you still have an elevated cost.”
Daco said that, in the aggregate, average prices and wages have both gone up about 20% since the pandemic. “But no one spends or earns the exact average,” he said. “Rent, gas prices, groceries, autos, insurance costs … those types of sectors are likely to see more persistent impact from cost fatigue and more scrutiny in terms of consumer spending.”
Which all leads to the question on everyone’s minds: when will the Fed cut interest rates? Daco predicted 75 basis points of cuts beginning in June, followed by 150 basis points in 2025 — in line with the views of CFOs during the discussion. However, Daco also said that some policymakers could favor less policy easing if disinflation slowed, and he stressed that interest rates will likely stay above the pre-pandemic range that CFOs grew used to after the financial crisis.