CFOs, Treasurers Believe Economy is Still in Recession

Despite the U.S. economy showing signs of stability in recent months, financial professionals there still maintain a recessionary view, according to an on-site survey conducted by the Association for Financial Professionals (AFP) during the organisation’s annual conference.


According to AFP, the uncertain outlook for near-term business conditions parallels expectations that the organisations of the respondents will not resume hiring or capital spending, which they had halted over the past year.


The survey says that just 11% of responding conference attendees —which include CFOs, treasurers and other treasury and finance executives representing companies of a median size of $1.5 billion in annual revenues—believe that the U.S. economy is out of the recession. The outlook for the near-term is not much more optimistic. Just 20% of survey respondents believe the recession will end before of the year while 69% expect the recession will continue well into 2010.


In the survey, AFP asked respondents whether their organisations would be apt to increase or decrease payrolls in the next six months, and the response: nearly two-thirds of financial professionals say they expect to maintain payrolls at current levels. Of those responding, 22% expect company payrolls to shrink further while just 14% anticipate that their organisation will resume hiring over the next six months. Similarly, the overwhelming majority of survey respondents expect to either maintain or further cut capital spending over the next six months. Just 21% of financial professionals anticipate their organisation will increase capital spending in the coming months.


As employment and capital spending have stabilised, so has their companies’ access to capital, says AFP. More than half of respondents indicate that their organisations’ access to capital stabilized over the past six months. Further, the area where capital access may have improved is among companies that have utilized the debt markets—31% of organisations have had improved access to debt markets over the past six months. Access to banking lending has improved for 22% of respondents while a similar percentage report improvements in raising capital in the equity markets.


When asked about the greatest risk to their organisation’s ability to prosper in 2010, financial professionals were most likely to identify one of two threats: failure of consumer demand to materialize (30%) and the possibility of a double dip recession (28%). Consistent with the reported stability in capital markets above, only 12% of survey respondents see a loss of access to capital as the greatest risk to their organisation.


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