CFO Optimism at 5 yr Low

by Erin McCune on September 13, 2006

in Research Round Up

CFO magazine/Duke University's quarterly Business Outlook Survey finds CFO optimism about the U.S. economy at a 5 year low. Many finance executives are planning reductions in capital spending and hiring, spurred by concerns about consumer demand, the rising cost of labor, and fuel costs.

Key Findings

  • Level of pessimism about the U.S. Economy is higher in more than five years. Nearly half of CFOs are more pessimistic about the economy than last quarter. Only 19.8% are more optimistic.
  • Capital spending plans have been cut. Planned increases of only 5.1% down from planned increases of 7.5% last quarter.
  • CFOs expect earnings to increase 9.4% over the next 12 months, down from last quarter's 10.4% predicted increase.
  • For the first time, weak consumer demand is #1 concern. Other primary concerns are rising labor costs and high fuel costs. Additional capital spending and hiring cuts will result if consumer demand weakens further.
  • CFO's optimism about their own firms also fell. 45.8% are more optimistic about their company's prospects vs. 49% last quarter.

The September 10, 2006 survey includes responses from 571 U.S. CFOs from public and private companies. Duke and CFO also surveyed 208 CFOs from Asia and 180 from Europe.

Detailed results are available here.

CFOs' Optimism at 5-Year Low
Don Durfee and Sarah Johnson
September 13, 2006

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