Economy: CFOs, CEO optimism still declining.


Several recent surveys find chief financial officers holding dim outlooks for the near-term economy in the United States. For one, the Bank of America Merrill Lynch 20 12 CFO Outlook Fall Update reveals that confidence in economic growth has declined sharply compared to earlier this year, as just 36 percent of financial executives surveyed said they expect the economy to expand in 2012; this is down from 63 percent in the spring.

According to those surveyed, the biggest increases in potential impacts came in global market unrest, which at 55 percent is up from 24 percent in the spring; and U.S. unemployment levels at 54 percent, up from 39 percent.

Among other findings from the BofA survey:

* Recession on the Horizon? 13 percent say they expect the economy to contract - a jump from 4 percent in the previous survey.

* Economic Expansion? 36 percent say they expect the economy to expand, down from 63 percent in the spring.

* Government Leadership Lacking: 70 percent express concern about the effectiveness of U.S. government leaders.

* Fiscal Discipline Matters: 61 percent cite the U.S. budget deficit as a significant issue.

* Among the CFOs' top concerns: health care costs (60 percent); oil prices (50 percent); and consumer confidence (53 percent).

"The combination of uncertainly and volatility have un-derstandably made CFOs more cautious as the year pro-gressed," said Laura Whitley, head of Global Commercial Banking at Bank of America Merrill Lynch. "While many CFOs remain optimistic that their own companies will grow, they recognize there are many factors out of their control, and significant concerns remain about the outlook for the economy the rest of this year."

The BofA results were compiled from interviews of 250 CFOs, finance directors and other executives from U.S. companies with revenues between [dollar]25 million and [dollar]2 billion from mid June to mid-July.

Further, respondents to a survey conducted by audit and accounting firm Grant Thornton of 400 CFOs and controller between late-June and July, said they are concerned about the cost of benefits. Fifty-four percent of CFOs in the U.S. do not foresee any changes in the health of the economy over the next six months. Yet, most of those surveyed are optimistic about maintaining (45 percent) or increasing (37 percent) their firms' headcount over the next six months.

The biggest barrier to employee and company financial growth, however, they say, is the cost of employee benefits...

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