• Fears about consumer demand spike in the latest quarterly survey of the CNBC CFO Council.
• At least one rate cut from the Fed is coming, but a significant number of chief financial officers say the first rate cut won't come until 2025, and inflation will remain elevated into 2026.
• The CFOs say high prices and interest rates are the biggest issues in the lead up to the November election, and at this point, nearly 60% of CFOs surveyed said they expect Donald Trump to win.

On Tuesday, Walmart's CFO warned investors at a conference that the second quarter was going to be the retailer's "most challenging quarter" for the year. He isn't alone among chief financial officers sounding a little down about what's taking place in the economy right now, and uncertain about what comes next. Fears among top corporate CFOs about shaky consumer demand have hit a six-quarter higher, according to the latest CNBC CFO Council survey, with the Q2 survey the first time since the beginning of 2023 that over half of CFOs cited consumer demand as the biggest external risk to their business.

Consumer demand fears among CFOs have been rising in recent quarters, and match evidence from the market across sectors, with fast-food chains rushing out value menus and car dealers having more difficulty moving inventory. The 54% of CFOs who cited consumer demand as the biggest risk is up from 18% a year ago, and 37% last quarter.

On a recent call of CFO Council members during which they are granted anonymity to speak freely, a financial services CFO shared data that their firm collects showing that while consumers are still traveling and eating out, the transaction values for those activities are down. "They're not pulling back entirely, but they're most certainly finding less costly ways to accomplish their goals," the CFO said. Food sector CFOs on the call said they are heavily focused on value right now, with one specifically invoking the term "value war." 

The quarterly CFO Council survey reflects a sampling of views from chief finance officers across the market and sectors, with 24 respondents included in the Q2 survey, conducted June 3–June 20.

While elevated, a cautious view of the consumer has not been uncommon among this CFO group in recent years, given their knowledge of Federal Reserve policy history and the impact of higher rates on past economies, from weak demand to layoff spirals. Still, their current view of the Fed and the interest rate environment has not changed to as significant a degree as their view of the consumer. In fact, the percentage of CFOs who rate the job the Fed is doing as "good" is now at its highest level ever – 70%. But there were a few notable moves in other survey numbers related to monetary policy and the rate outlook.

Last quarter, almost half of CFOs forecast a 10-year yield that would dip below 4% by the end of the year. Not anymore, with nearly 92% expecting the 10-year to remain above 4% through Dec. 31.

As the market continues its debate over how to read the latest inflation numbers, and what the Fed is making of the data, CFOs taking the survey continue say inflation will remain elevated for a longer period of time — consistent with a view held in recent quarterly surveys. But now, CFOs have pushed out their inflation view even further. Roughly 42% of CFOs surveyed say inflation will not reach the Fed's target of 2% until 2026, significantly higher than any other response — 29% said the first half of 2025.

The largest percentage of CFOs (38%) still expect a rate cut from the Fed in September, but that is closely followed by 29% who don't think any cut is coming in 2024. Still, between forecasts for a cut in either September, November or December, one cut before the end of the year remains the majority position, consistent with the Fed's own view. At the Fed's recent FOMC meeting, Chair Jerome Powell said the central bank isn't ready to start cutting rates but noted that while inflation is still running too high, the pace of price increases has come down "significantly." 

CFOs' overall view of the economy has slipped, but isn't dire. One-third of CFOs still see a soft landing ahead, but that is down from almost half (48%) who felt good about the soft landing scenario last quarter. While that has dropped, it's still twice the level of confidence in a soft landing compared to what CFOs expected in the year-ago survey. A little over half of CFOs (54%) say the economy is either in a recession or will enter one between the second half of this year and second half of 2025. And when asked to choose a trend for the stock market, more CFOs are now inclined to forecast a pullback, with just under 60% saying it is more likely the Dow Jones Industrial Average falls back to 35,000 rather than reach 45,000 for the first time.

In the lead up to the election, CFOs say interest rates and inflation remain the biggest issues for them, versus other political issues in the news, including immigration, tariffs and tax policy. And while it may be early, CFOs were not shy about calling the election and who will inherit those issues into 2025: 58% think Donald Trump will be elected president. Only 12% think Biden will prevail, while the remaining respondents said they were unsure.