“There is talk of green shoots. However, there is very little fundamental data to support a recovery at this point.” – Duke business professor Campbell Harvey

DURHAM, N.C. – Unemployment in the U.S. could soar has high as 12 percent in the coming months as the global recession keeps a vice-like grip on the global economy.

That’s one of the chilling conclusions in the latest around the world conducted by Duke University’s Fuqua School of Business and CFO Magazine.

“The Duke-CFO Survey … news is grim,” wrote Campbell Harvey, an international business professor at Duke who founded the CFO survey, in his personal blog.

“One of the big challenges is to reconcile the growth in confidence against the hard data. Consumers as well as CFOs are more confident. However, our survey shows that this confidence is not influencing business plans. CFOs are playing a cautious, wait and see game, before pulling the trigger on new capital spending and employment growth.”

Key conclusions:

• “Recession to drag on for the rest of 2009

• “Credit conditions deteriorate for many firms

• “Capital spending and employment to be slashed”

“Our survey carries an important message: Don’t put too much weight on the ‘soft’ data like consumer confidence,” Harvey said in a statement about the survey.

“Recovery requires sustained confidence, and such confidence is forged by stronger economic fundamentals,” he added. “The economic fundamentals – employment, capital spending, the cost of credit – are still fundamentally troubling.”

In his blog, he noted some data is mixed.

1. “Bottoming Out? CFO confidence graph shows that optimism is up but still lower than any other point historically (except the last quarter). It is like saying that housing sales increased by 10% – that is good but a 10% increase on a very low level doesn’t do much for economic growth.

2. “Sustained vs. fleeting. I think people are grasping for some good news. There is talk of green shoots. However, there is very little fundamental data to support a recovery at this point. It is somewhat easy to feel a little more optimistic. It is a different matter to translate that into corporate plans. That is why I emphasize the idea of “sustained” optimism. Optimism will only translate into corporate action after CFOs are confident that the recent news is not fleeting. They will not change their corporate plans until there is evidence of a sustained recovery. Of course, there is a chicken and egg problem that results from this!

3. “This crisis is different. I think CFOs are feeling more optimistic but given the gravity of the crisis – it is dangerous to extrapolate from previous recessions/recoveries. This is another reason to be cautious.”

Overall, the mix of opinions is certainly hurting hiring plans. North Carolina’s unemployment is already above 10 percent, and the U.S. jobless rate is headed in that direction. The CFO survey led the authors to conclude that U.S. employment is likely to “decrease by about 5.5 percent over the next 12 months, which could drive the overall unemployment rate into the 11-12 percent range.”

According to Harvey, the government’s bailout plans and hiring won’t keep joblessness from worsening.

“Presumably, government programs will offset some of these losses, but even the most optimistic government forecasts would reduce the losses by only two million,” he said. “We’re facing the possibility of another four million lost jobs.”

CFOs expect the recession to last through 2009 and as a result capital spending is expected to be cut 10 percent.

CFOs also reported that credit for companies has stabilized for those with strong credit ratings but worsened for lower rated firms.

However, 54 percent of the U.S. CFOs are more optimistic than they were last quarter, the authors noted in one of the few bright spots.

Globally, CFOs expect 10 percent less capital spending in Europe and 3 percent less in Asia.

“The rest of 2009 will remain challenging, but 2010 looks better for the U.S. and Asia,” said Kate O’Sullivan, senior writer at CFO Magazine, in a statement. “The weak European outlook could dampen the recovery in the rest of the world. To put it in context, the U.S. rating of 52 is still well below the long-term average of 61, but it is heading in the right direction. Given the strong record of the CFO optimism index as a leading indicator, we can expect the U.S. economy to begin to recover by early 2010. But the CFO outlook for the rest of 2009 is fairly dismal.”