It’s no surprise that confidence in the short-term economy is low. The economic uncertainty that followed the September 11 terrorist attacks still looms over the domestic and global business landscape, casting its shadow on an already sluggish economy. Unemployment figures continue to creep up, while consumer confidence and spending decline. There’s been a surge in layoffs and volatility in stock prices. As a result, only 11 percent of U.S. CFOs say they are confident about next year’s global prospects, a slight slip from last quarter’s vote, and a drop of 56 percentage points from Q4 2000, according to CFO’s quarterly Global Confidence Survey.
The survey, which polled finance executives in the United States, Europe, and Asia about regional and global economic issues, found that 71 percent of U.S. CFOs are either concerned or very pessimistic about both the global and domestic economy in the near term. Weighing most on their minds is the economic downturn, a lack of capital, and increased competition. The confidence of Europe’s CFOs is also waning, as 56 percent declare they are concerned or very pessimistic about their own short-term economy, compared with 26 percent last quarter. Asia’s finance chiefs remain somber about short- term domestic prospects: like last quarter, 86 percent claim to be concerned or pessimistic.
All told, only 13 percent of CFOs from all three continents can muster any optimism or confidence about the near-term regional economies–quite a decline from Q4 2000’s 61 percent and last quarter’s 22 percent.
One near-term bright spot did emerge from the survey. Sixty-three percent of U.S. CFOs will either increase or maintain their current level of capital spending next quarter, and 70 percent of Europe’s CFOs will do the same. However, only 43 percent of Asia’s executives will increase or maintain current levels.
The five-year outlook once again is sunny: 74 percent of U.S. CFOs are optimistic or confident about the long-term global economy, while 81 percent give a thumbs-up to the domestic economy. — M.L.
CFO Global Confidence Survey Results
| Attitudes toward global economy in the short term: | ||||
| United States | Europe | Asia | Global | |
| Very optimistic | n/a | n/a | n/a | n/a |
| Confident | 11% | 19% | 3% | 11% |
| Neutral | 18% | 19% | 3% | 13% |
| Concerned | 67% | 53% | 75% | 65% |
| Very pessimistic | 4% | 9% | 19% | 11% |
| Attitudes toward own region in the short term: | ||||
| United States | Europe | Asia | Global | |
| Very optimistic | n/a | 6% | n/a | 2% |
| Confident | 11% | 19% | 3% | 11% |
| Neutral | 18% | 19% | 11% | 16% |
| Concerned | 67% | 47% | 56% | 56% |
| Very pessimistic | 4% | 9% | 30% | 15% |
| Attitudes toward global economy in the long term: | ||||
| United States | Europe | Asia | Global | |
| Very optimistic | 4% | 11% | 3% | 6% |
| Confident | 70% | 56% | 61% | 62% |
| Neutral | 15% | 3% | 27% | 15% |
| Concerned | 11% | 27% | 6% | 15% |
| Very pessimistic | n/a | 3% | 3% | 2% |
| Capital Spending projections for next quarter | ||||
| United States | Europe | Asia | Global | |
| Up by 5+% | 33% | 20% | 6% | 18% |
| Up by <5% | 11% | 14% | 9% | 11% |
| Down by <5% | 4% | 8% | 3% | 5% |
| Down by 5%+ | 33% | 22% | 54% | 37% |
| No change | 19% | 36% | 28% | 29% |
