What CFO's Fear

While chief financial officers (CFOs) do not expect a double-dip recession, doubts about the strength of the economy linger.  That is according to the Duke University/CFO Magazine Global Business Outlook Survey, which surveyed nearly 1,000 CFOs from a broad range of global public and private companies about their expectations for the economy.

According to the quarterly survey, which has been conducted for 62 consecutive quarters, CFO optimism declined in the third quarter, with 65 percent of U.S. executives growing more pessimistic compared with 12 percent who grew more optimistic.  Further, domestic U.S. employment is expected to rise about one percent in the next year, which would likely leave the unemployment rate at around nine percent.

Capital spending in the U.S. is also expected to grow, with estimates projecting a 4.5 percent increase.  However, this is roughly half the pace that was predicted last quarter.  This may have something to do with the one-third of firms surveyed that say they’ve slowed planned spending this year, citing economic uncertainty and funding constraints.  As a result of the great economic uncertainty, most firms plan to hold onto cash.

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