CFOs’ economic optimism sinks to all-time low

React to gas prices, presidential elections & IFRS

The optimism of CFOs about the U.S. economy sank to an all-time low according to the most recent survey from the Financial Executives International (FEI). The optimism index for the U.S. economy was 48.92 for the second quarter, falling below last quarter’s 54.29, which had been the all-time low.

The growth of the U.S. economy is the principal worry for the second half of 2008 (48%).  Other significant concerns for the CFOs included:

• Rising oil costs (35%)
• Consumer spending /demand (29%)
• Inflation (25%)

While their economic outlook continues to drop, the CFOs surveyed do remain relatively stable on the outlook for their own companies, dropping only 1.06 points to 66.

More highlights on the optimism index include:

• Plan to increase technology spending by an average of 4% and other capital spending by an average of 8% for the next 12 months
• Expect modest hiring increases of 1%
• Increase product prices by 5%

CFOs react to oil prices

Nearly half of respondents feel that the price of crude oil will continue to skyrocket. At least half of CFOs surveyed believe that the price of oil per barrel will be at least $160 or higher in six months.

Many said they are actively engaged in changing their behavior due to rising oil prices, specifically:

• 53% increasing prices for their company’s products and/or services
• 50% cutting back on corporate travel
• 47% becoming more ecologically responsible or “green”

CFOs and the presidential election

When considering the presidential candidates, CFOs evaluate which candidate's policies best align with their companies.  When asked which candidate, if elected to office, would be most beneficial to their company overall, an overwhelming majority (71%) of CFOs selected Republican presidential candidate John McCain, while only 13 percent of respondents chose Democratic presidential candidate Barack Obama.

CFOs aren't ready to take advantage of IFRS

Only 20% of the CFOs surveyed said they would file and/or prepare financial statements using international financial reporting standards (IFRS) if the opportunity was available for their company, while more than half (53%) would not. 

Almost half said that it would only take their company two to three years to adapt to IFRS should they decide to do so.

Meeting XBRL filing requirement

Nearly half (46%) who are affected by the new XBRL filing requirement said they would use an XBRL filing service, with  31% planning to implement an XBRL tagging software.

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