CFOs slash profit forecasts by 22% as economy triggers concern

Though data has shown CFOs have been both confident and concerned about the U.S. economic outlook this year, new data from Grant Thornton’s Q2 2025 CFO survey reveals a troubling trend among finance leaders. 

Amid inflation concerns, tariff uncertainty and weakening consumer demand due to a variety of reasons, profit expectations saw the sharpest decline quarter over quarter in more than three years. Only 61% of CFOs now expect profits to rise in the next 12 months, down from 78% in Q1 — a 17-point drop or a 22% decrease. 

Data also indicates confidence in the economy is plummeting, and urgency among finance leaders is prevalent. But how CFOs are reacting to things outside of their control, like geopolitics, varies. It’s important to note that although this data is new, its sourcing took place during April 30 and May 9, 2025, before the war between Israel and Iran, which has major geopolitical and economic implications as well, began. 

Confidence in achieving core business goals among finance leaders collapsed in Q2. Only 37% of CFOs expressed confidence in areas like meeting cost control targets and supply chain goals, while just 41% felt confident about reaching growth targets, all the lowest levels in at least 15 quarters. Economic pessimism also reached a 15-month high, with nearly half (46%) of CFOs expressing an overall negative outlook on the U.S. economy. 

Among CFOs, overall confidence in their ability to execute is dropping. 

The downturn in confidence marked a break from early 2025 optimism. Respondents from industries like manufacturing, banking and retail were likely to be less confident as they cited tariff-induced business challenges, tighter margins and caution around discretionary spending. For CFOs in these areas, the data indicates a business climate where even short-term planning is difficult, with the flexibility to shift core operations in near real time being vital. 

The ongoing tariff environment is shaping major business decisions for CFOs who are affected. Many had to make changes to business strategy or operations, with nearly half (46%) making adjustments to supply chains, over four in 10 (42%) conducting high-frequency scenario planning and over a third (35%) raising prices to manage margin pressure. 

The data also shows that despite the changes to operations and strategy being implemented amid uncertainty, the areas where finance leaders are certain aren’t very positive. Nearly eight in 10 (79%) expect inflation to rise, and six in 10 (60%) anticipate a drop in consumer spending. 

This may require significant changes that will impact operations and the people involved in executing them. Nearly a third (31%) of CFOs said they’re planning layoffs right now, and over a quarter (28%) plan to reduce production levels because of the anticipation of weaker demand. Meanwhile, the data shows tariffs may be fulfilling their originally intended goal, as almost a quarter (23%) of CFOs told surveyors they are relocating some or all production to the U.S. 

To strategize around potential economic volatility, some finance leaders are accelerating investments in automation and AI. Almost four in 10 (39%) of CFOs are implementing technology to reduce costs. Over three quarters (77%) of those tracking ROI on generative AI investments report at least a 2x return, up from 68% in Q1. This finding is noteworthy because producing ROI on technology investments, particularly in times of economic volatility and in the midst of cost-cutting efforts, has become a real challenge and pressure point for CFOs. 

Finance chiefs and their teams are making an effort to collaborate with product and customer-facing areas of the business more frequently, too. Over half (51%) of CFOs now rank customer acquisition and retention as a top area of focus, up from 38% last quarter. A 13-point jump in planned sales and marketing spend reflects how finance leaders are using digital tools not only to cut costs but to grow revenue amid consumer pullback.