US CFOs’ Confidence in Economic Growth Wanes
Confidence among US chief financial officers (CFOs) in America’s economic growth prospects has declined sharply, according to the latest Bank of America Merrill Lynch (BoA Merrill) CFO outlook survey, with financial executives expressing concerns about several potential impacts on the nation’s economy.
The results were compiled from interviews of 250 CFOs, finance directors and other executives selected randomly from US companies with annual revenues between US$25m and US$2bn.
Only 36% of CFOs surveyed in the bank’s CFO outlook autumn update said they expect the US economy to expand in 2012, down from 63% in the spring update earlier this year. At the same time, 13% of those surveyed said they expect the economy to contract, compared with 4% in the previous survey. The latest responses are similar to the 2012 CFO outlook annual survey conducted in the autumn of 2011, when only 38% of executives said they expected economic expansion this year.
CFOs named several factors as significant concerns that could have an impact on the economy. The effectiveness of US government leaders was cited by 70% of executives, while 61% named the US budget deficit. Other potential impacts chosen were healthcare costs (60%), global market unrest (55%), US unemployment levels (54%), consumer confidence (53%) and oil prices (50%).
The biggest increases in potential impacts were in global market unrest, up from 24% in the spring, and US unemployment levels, up from 39%. In no previous CFO outlook survey have executives voiced significant concern about so many factors.
“The combination of uncertainly and volatility have understandably made CFOs more cautious as the year progressed,” said Laura Whitley, head of global commercial banking at BoA Merrill. “While many CFOs remain optimistic that their own companies will grow, they recognize there are many factors out of their control, and significant concerns remain about the outlook for the economy the rest of this year.”
Other notable findings in the survey: