Monday, August 2, 2010

How Optimistic Are CFOs About the Economy?

CFOs are expressing less confidence and a bit more caution, according to the second quarter 2010 "CFO Outlook Survey," released by Financial Executives International (FEI) and Baruch College's Zicklin School of Business.

After rising for four consecutive quarters, the Q2 CFO Optimism Index for the U.S. economy experienced a nearly five point decrease (down from 58.14 to 53.60), and CFOs' outlook for their own companies fell slightly from 69.49 to 67.40.

While confidence is down, and areas such as IPO activity and the rate of capital spending remain slow, CFOs' outlook toward credit is more favorable and various findings demonstrate substantial progress since 2009.

Here are some of the survey findings:

~Regarding healthcare, two thirds (66%) plan to increase the monthly amount that their employees pay for benefits, and more than a third (34%) also plan to decrease the scope of the healthcare package.

~Regarding access to credit, less than one fifth of respondents (17%) feel that it will be more difficult to access credit over the next six months, compared to the 24 percent of CFOs who shared this sentiment when asked in the third quarter of 2009.

~When asked about the potential impact the financial regulatory reform package would have, the most-cited effect was increased banking costs (45%), followed by additional compliance and reporting requirements and costs (39%).

~The majority of CFOs (53%) also predict their taxes will increase. Despite expected tax increases, a large majority of CFOs (78%) remain confident that their business decisions will remain unaffected by the tax outlook.

~CFOs are expecting increases in net earnings (20%), revenue (11%) and hiring and technology spending (both at 7%) over the next 12 months. CFOs will face a number of added expenses over the next 12 months, including new costs related to taxes, financial regulatory reform and healthcare.


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