CFOs Expect Slow Economic Growth

Compiled By Dave Schafer Chief Financial Officers predict a U.S. economic rebound -- next year. For the time being they expect growth to remain slow and anticipate moderate corporate earnings increases over the next 12 months, the new "CFO Corporate Outlook Survey" finds. "CFOs see light at the end of the tunnel, but it's at least six months away," says John Graham, finance professor at Duke University's Fuqua School of Business. Graham was director of the quarterly survey, conducted by Fuqua and Financial Executives International (FEI). FEI says 222 CFOs participated in the study from companies representing a broad range of industries, geographic areas, and revenues. The findings of this quarter's survey parallel many of the expectations of last quarter. The CFOs, on average, predict the U.S. GDP will grow 1.9% during the next 12 months. Almost two-thirds (64%) of those surveyed think the GDP will rebound to at least 3% annually in the first, second, or third quarters of 2002. And 63% forecast their companies' earnings to increase over the next 12 months. The CFOs expect an 11% revenue-weighted average earnings increase across all companies. Overall, 67% of the CFOs say they are more (40%) or equally (27%) optimistic about the economy compared to six months ago. The survey also reveals that companies will respond to the slow GDP growth by reducing inventories and employment. Twenty-six percent of the companies surveyed plan on cutting employees during the next 12 months, and another 26% will hold employment steady. Last quarter's employment responses closely paralleled the current quarter results. In the 5-year history of the survey, this quarter and last were the only times the majority of companies have not planned to increase employment. For the complete survey visit Fuqua School of Business CFO Outlook Survey.

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