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Survey of CFOs Finds U.S. Economy is Improving but Remains Weak

June 14, 2010

The most recent quarterly Global Business Outlook Survey, conducted by Duke University's Fuqua School of Business and CFO Magazine, asked 1,102 chief financial officers from a broad range of global public and private companies about their expectations for the economy. The quarterly Duke University/CFO Magazine Global Business Outlook conducted during the quarter up to June 4, 2010, generated responses from 535 CFOs from the U.S., 139 from Europe, 219 from Asia (not including China), and 209 from China. (The number of survey participants from colleges and universities is not specified). According to this survey, a plurality (40 percent) of U.S. CFOs are optimistic about the U.S. economy, but many also believe employment and other areas of the economy will improve only slowly over the next year. 

CFOs generally expect domestic employment to grow by just under 1 percent during the next 12 months. U.S. companies expect full-time domestic employment to inch up by 0.7 percent over the next year, while temporary employment will fall 0.2 percent. The labor picture is much worse in Europe (with a planned workforce reduction of 1.6 percent) and much stronger in Asia (with expected growth of more than 5 percent). 

Chances for a quick turnaround in the U.S. employment picture appear slim. Nearly 60 percent of U.S. CFOs believe that employment at their companies will remain below pre-recession levels until at least 2012.  Fewer than half the companies that cut employment packages expect to restore pay, training, and benefits to their pre-recession levels during the next 12 months. These negative employment trends are expected to restrict growth in consumer confidence and spending over the next year. 

In addition, CFOs expect credit market conditions to remain tight, especially for small firms. One-third of micro-firms (those with 100 or fewer employees) say credit conditions have worsened in the past six months. CFOs are also concerned about current weak consumer demand, federal government policies, and global financial instability. Top concerns about their own businesses include maintaining profit margins, low employee morale, and rising health care costs. 

At the same time, CFOs believe there are some areas of strength in the economy. They estimate that earnings will rise 12 percent and capital spending 9 percent in the next 12 months. Research and development and tech spending will increase 4 to 6 percent.

Optimism among Asian CFOs is generally much higher than in the U.S. Asian chief financial officers expect capital spending by their companies to increase by nearly 12 percent, and say earnings will climb by just over 10 percent. Domestic employment is estimated to rise by more than 5 percent in Asian countries. 

The Duke University/CFO Magazine Global Business Outlook survey has been conducted for 57 consecutive quarters. More detailed results, including tabular summaries of results from the most recent and  previous surveys, are available.


Ken Redd
Director, Research and Policy Analysis