More C Suite Pessimism

Another CFO survey shows growing pessimism about the economy, and planned contractions in business expenditures and investments:

The survey of 345 corporate CFOs, by Financial Executives International and Baruch College’s Zicklin School of Business, tracks a quarterly CFO Optimism Index…optimism about the U.S. economy plummeted to an all-time low among CFOs in the fourth quarter…Optimism about the CFOs’ own companies also dipped in Q4…

On top of the crummy state of the economy and most businesses, there’s more pressure from employees and shareholders (and from reports we’ve seen, from banks and creditors)…

Eighty-eight percent of the CFOs feel that the breadth of responsibility and pressure placed on their roles by employees and shareholders is higher compared with this time last year.

…while the pain is going to be shared with employees, vendors, and service providers (and by extension, tax collectors): 

Sixty-eight percent of CFOs identified hiring as an area for cutbacks in 2009, with 65 percent saying they have already implemented labor cutbacks during 2008. Eighty percent of CFOs have scaled back discretionary spending.

As business cycles go, these are run-of-the-mill measures. However, when you consider the extreme financial leverage that was created from 2003-2007, a $1 contraction in economic activity has a much greater impact than normal. And, if you take stock of the kinds of non-productive investments made with many of those financial assets — such as residential real estate and flat screen TVs — it becomes apparent that the economy is in for a long, tough slide.

URLs:

http://www.webcpa.com/article.cfm?articleid=30244&pg=financial&hbxcg=financial_crisis 

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