Amid looming threats to the Eurozone, sequestration cuts and a fiscal cliff, Chief Financial Officers, especially in the U.S., continue to remain uncertain about the future of the economy and their business, as well as the expectation of a recovery, finds the latest “CFO Outlook Survey.”
According to the survey conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business, CFOs are doing more with less, by retaining their current talent, and potentially delaying hiring.
Respondents to the quarterly survey, which polls CFOs of public and private businesses on their economic and business confidence, revealed that U.S. CFOs have grown increasingly doubtful that the U.S. will experience a recovery in the next year.
When asked about the timeframe that a U.S. economic recovery would take place, 53 percent believed a recovery would be delayed until at least 2014, an increase from the previous quarter, when only 38 percent predicted a recovery would remain that far out.
The number of CFOs who believed the U.S. is already in the midst of a recovery stayed steady (26% versus 22% in Q2), but only 13 percent now trust the U.S. would recover at any point in 2013.
More than three-quarters of U.S. CFOs (76%) stated that their expectations of U.S. economic growth will be impacted by tax increases and potential sequestration. A similar percentage of CFOs (74%) are bracing for impact of the scheduled expiration of Bush-era tax cuts at the close of 2012.
Sixty-seven percent of CFOs feel that the current Congress should postpone reductions mandated under sequestration and extend the Bush tax cuts for another six to twelve months, to give the next Congress and the Administration enough time to work out a permanent solution to the fiscal crisis. This is compared to nearly a fifth of U.S. CFOs (21%) who believe Congress should allow sequestration to occur and the tax cuts to expire.
“Post-election, CFOs in the U.S. are expressing alarming concerns over the threat of a fiscal cliff and sequestration, which has a resounding impact on their prospects for economic growth,” says Marie Hollein, President and CEO of Financial Executives International. “Respondents to the survey seem to support the postponing of sequestration cuts and extending Bush tax cuts to avoid pushing the U.S. into a potential recession. With the timeline for a decision by the current Congress drawing closer, CFOs are growing more uncertain that the U.S. economy will recover in the near term.”
CFOs in the U.S. are also preparing for the full implementation of the Patient Protection and Affordable Care Act (PPACA) by 2014, and planning for potential effects on hiring and benefits in the next two years.
While about 44 percent expect no significant impact on hiring and benefits in 2013, CFOs will be forced to make changes in 2014, most commonly through an increase in employee contributions (42%), and decrease in the quality of employee benefits (41%).