Note: The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – Chief financial officers are very wary of a possible recession occurring by mid-2012, according to a new survey from Duke’s Fuqua Business School and CFO Mgazine.
While overall sentiment is more positive, including plans to add workers, than in the previous quarterly report, the “Global Business Outlook Survey” issued Thursday is hardly reason for Christmas cheer.
Here’s how Duke headlined the report:
“U.S. outlook improves, though recession risk still acute.”
U.S. CFOs see a 31 percent chance the US will slide back into recession in the next six months. (If a recession hits, companies will cut to the bone, survey founder says. Read details here.)
Adding to the gloom is the conclusion of the more than 1,000 CFOs surveyed worldwide that Europe is “much worse” than last quarter with “no growth expected in spending or hiring.”
Thank you, euro and debt crisis. If the situation worsens, U.S. businesses will suffer, too.
“83 percent percent of U.S. firms say that a scenario in which multiple European banks become insolvent would negatively affect their businesses, with 24 percent saying the effect would be significant,” the report said.
Then there is Asia – primarily China, where growth has helped stave off a repeat of the 208-9 recession. “The outlook in Asia has also softened,” the report warns.
“It’s encouraging to see this rebound in optimism because increases in CFO optimism have historically preceded improvements in the overall economy,” said Kate O’Sullivan, deputy editor at CFO Magazine, about the survey.
“Still, the level of optimism is low by historic measures, suggesting that economic growth will remain relatively slow.”
- U.S. CFOs rank their optimism about the economy at 53, up 4 points from the previous survey but well under the 60 which is the historic average of the survey.
- Still, the score is 13 higher than the recession low of 40 which came in the March 2009 survey.
- Hiring is expected to grow by 1.5 percent, which would push the U.S. unemployment rate down to 8 percent.
- Transportation, energy, services and consulting are forecast as the best areas for job growth.
- Look for “modest work force reductions” in finance and media.
- Capital spending should grow to 8 percent, up from 4.5 percent in the last survey.
- Tech spending should climb 6 percent.
- Research and development spending should grow 2 percent.
- Look for marketing and advertising to increase 3 percent.
- Weak consumer demand.
- Profit margin pressure is “intense.”
- “Continued” high costs for health care.
- Financial security around the world.
Results from the UNC finance survey were similar. (Read details here.)
Is anyone saying “Happy New Year” without tongue planted firmly in cheek?
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