Duke University/CFO Magazine year-end 2007 survey is out, and the results are not encouraging.
According to John Graham, director of the survey and a finance professor at Duke’s Fuqua School of Business, CFO optimism is dramatically spiraling downward.
This is particularly worrisome, because CFOs — unlike the more naturally opptimistic CEOs — have a track record of accurately predicting future economic activity, often several months ahead of traditional indicators.
The details from Duke /CFO Magazine:
"Optimism reached its lowest point since the optimism index was launched six years ago. Pessimists outnumber optimists by an eight-to-one margin, with 72 percent of CFOs more pessimistic and only 9 percent more optimistic about the U.S. economy than they were last quarter.
— Weak consumer demand, high labor and fuel costs, and credit market turmoil are the top concerns of CFOs.
— Credit conditions have directly hurt one-third of companies, most through decreased availability of credit.
— Year-end bonuses will fall by 10 percent relative to last year.
— Among firms with greater than one-fourth of sales in foreign locations, more than 60 percent have taken actions in response to the depreciated dollar by increasing hedging (expanding the range of investments to reduce risk) or changing location of investments and outsourced employment.
— Capital spending is expected to increase only 4.1 percent, and domestic employment will increase only 0.5 percent, though outsourced employment should rise 5.6 percent.
The survey is only 6 years old, so we don’t have a long history of its track record over many business cycles.
It should be interesting to see how this one plays out . . .
Survey: CFO Optimism Hits Another Record Low
John Graham (Duke), Kate O’Sullivan (CFO magazine)
Wednesday, December 5, 2007
Pessimism Is Growing in Executive Suites
NYT, December 6, 2007