RESEARCH TRIANGLE PARK, N.C. — Many chief financial officers are turning pessimistic about the state of the U.S. economy, and results will include reduced capital spending as well as cut-backs in plans to hire new workers, according to the quarterly CFO survey conducted by Duke University and CFO magazine.

In fact, CFOs are more “sour” in their attitudes than at anytime in the five-year history of the survey.

Given the generally strong performance of the economy, the results surprised John Graham, a finance professor at Duke University, and CFO magazine’s Don Dufree, who coordinate the survey.

“I was surprised,” Graham told WRAL Local Tech Wire. “We are at a five-year high in pessimism or a five-year low in optimism.”

Dufree concurred, saying in a telephone interview: “Yes, we were surprised to find that CFO optimism has fallen as much as it has” even though the attitudes are following a trend that started the last quarter.

However, Graham is not ready to predict that a recession is on the economic horizon.

“The economy is not going into the tank,” he said. “There is not a consensus. One-third of CFOs list a probability of a session, but that doesn’t mean one is guaranteed. The way I would interpret it is that we will have slower growth over the next couple of years.”

Many CFOs cited similar concerns in the survey data, which was gathered on Sept. 10.

Despite U.S. unemployment being under 5 percent and consistent growth in the gross domestic product, many CFOs said they were hearing too many rumblings from customers and other people to remain optimistic themselves about business.

“Weak consumer demand — that’s the first time we had heard that,” said Graham. Consumer confidence, and thus spending, is being hurt by interest rates, energy costs and worries about housing.

“Fuel costs apparently have worked their way through the economy,” Graham said. “Now, consumer demand is the major concern.

“The number two concern is wage inflation,” he added. “One year ago, we were not hearing that.”

The low unemployment rate is help exacerbate company’s searches for workers, which drives up bidding to hire those that are available, Graham said.

“Some sectors are having a harder time finding skilled labor, and it’s true in enough sectors that CFOs are concerned about wage inflation,” Graham explained. Two areas under stress are construction, where there are shortages of experts such as plumbers, and in high-tech, with a growing need for programmers and lab technicians, he added. The net result is a “little bit of a spiral in wage inflation,” he said.

Dufree stressed that concerns about the housing industry are fueling consumer anxiety.

“CFOs I have talked to tell me that the economy is in decent shape, but lot of them see that housing prices could be crashing,” he said. “Fuel prices are also still uncertain. Those are two issues that take dollars out of consumers’ pockets and could lead to lower consumer spending, which could hurt the economy.”

Key findings of the survey include:

  • Nearly half of CFOs are more pessimistic about the U.S. economy, and only 19.8 percent more optimistic, than last quarter.
  • Capital spending plans have been cut, with planned increases of only 5.1 percent over the next 12 months, down from a planned increase of 7.5 percent last quarter
  • CFOs expect earnings to increase 9.4 percent over the next 12 months, down from last quarter’s 10.4 percent predicted increase
  • Weak consumer demand, rising labor costs and high fuel costs could lead to additional capital spending, and hiring cuts will follow if consumer demand weakens further
  • CFOs’ optimism about their own firms also fell, with 45.8 percent more optimistic about their company’s prospects, in comparison to 49 percent last quarter.
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