The survey, by Financial Executives International and Baruch College’s Zicklin School of Business, found 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 percent in the third quarter of the year compared to 22 percent in Q2), but only 13 percent now trust the U.S. would recover at any point in 2013.
Seventy-six percent of the U.S. CFOs in the poll stated that their expectations of U.S. economic growth will be impacted by tax increases and potential sequestration. A similar percentage of CFOs (74 percent) 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 12 months, to give the next Congress and the Obama 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 percent) who believe Congress should allow sequestration to occur and the tax cuts to expire.
CFOs on both sides of the Atlantic weighed in on their thoughts on the fate of the U.S. fiscal cliff. Given the election outcome, 51 percent of U.S. CFOs believed that the results lower the chances that the U.S. Congress will find a solution to the fiscal cliff before the New Year, compared with only 19 percent that felt it improved the likelihood of a settlement being reached. The majority of U.S. CFOs also believed that the way in which the problem plays out would have a significant impact on their economy. European CFOs monitoring developments from afar had a fairly more optimistic view of a positive outcome, with less than a fifth (16 percent) perceiving that President Obama's re-election lowered the opportunity for a solution.
CFOs in the U.S. expect little change in the unemployment rate in the next year, and on average, expect that it will remain above eight percent. CFOs in Europe on average expect their local unemployment to grow from nine percent to almost 12 percent in the next six to 12 months.
When asked about the impact of the recent U.S. election would have on their forecast, 58 percent of U.S. CFOs believe it will have a negative impact (compared with 12 percent who believed the impact would be positive). The overwhelming majority of U.S. CFOs felt that the election would have a negative impact on U.S. employment (71 percent) compared with nearly a fifth (19 percent) who felt there would be no impact and 11 percent who felt the impact would be positive.
"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," said FEI president and CEO Marie Hollein in a statement. "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."
Nearly a third of U.S. respondents (31 percent) stated that their business has been negatively impacted by Hurricane Sandy. Of those CFOs from the impacted companies, their employees and staff (40 percent) were most affected, followed by their supply chain (34 percent). Approximately a quarter of U.S. CFOs (24 percent) made adjustments to allow employees to work remotely, and 32 percent of respondents said their company had made donations or contributions to various organizations to help victims impacted by the hurricane.
CFOs in the U.S. are also preparing for the full implementation of the Patient Protection and Affordable Care Act by 2014, and planning for the 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 percent), and decrease in the quality of employee benefits (41 percent).