Financial Executives Internationals (FEI) and Baruch College’s Zicklin School of Business just released their quarterly “CFO Outlook Survey” and found that finance executives are bullish, despite stagflation concerns and general economic unease. “CFOs are basically saying that we’re increasing our expected spending on technology, our expected capital spending, and we think we have more control over prices than we thought we had a quarter ago,” says John Elliott, dean of Baruch College’s Zicklin School of Business.
CFOs are Optimistic
- Three-quarters (76%) of the 207 surveyed CFOs expect their companies to raise prices, a slight increase over the 71% projecting price increases in the first quarter’s survey. However, last quarter, the average forecast was an increase of 1.5%, about half the average increase projected this quarter for the next twelve months.
- Capital spending appears to be on the rise, too, with almost three-quarters (73%) of the surveyed CFOs expecting an increase at their company over the next twelve months. The average forecast is an increase of 8.1%, up from last quarter’s projected 6.6%.
- Hiring is expected to grow by 4.0%, the same as forecasted last quarter.
- While three-quarters of the CFOs say they are concerned about inflation, two-thirds (69%) of the surveyed group think the Federal Reserve should hold steady on interest rates. A quarter (26%) are in favor of a one-quarter percentage point increase.
CFOs Support Enron Verdict
[Note: The survey was conducted in early June, before Ken Lay’s death.] Survey respondents showed nearly full agreement with the Enron verdicts, with only 3% disagreeing with the guilty rulings against Kenneth Lay and 2% disagreeing with rulings against Jeffrey Skilling.
Among the respondents from public companies, 89% said their auditors were spending more time and care on their reviews. Corporate finance divisions at public companies have also grown significantly since the 2002 Act. Staffs have increased at more than two-thirds of the public companies surveyed (68%), compared to 15% at private companies.