CFOs Turn Gloomy on Economy, But Hold Brighter View of Their Own Companies' Prospects

National survey of financial chiefs finds weak job market to continue, while 8 in 10 believe US economy will not recover until second half of 2011 or later; worries on double dip

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Chicago — November 12, 2010 — In a national survey of US chief financial officers (CFOs) and senior comptrollers conducted by Grant Thornton, only 29 percent said they plan to increase hiring in the next six months, while 21 percent plan to decrease hiring.

A vast majority (79 percent) believe that the US economy will not recover until the second half of 2011 or later, and more than half (59 percent) are concerned with a double-dip recession.

"These findings are consistent with what we have been hearing from our dynamic-organization clients," said Grant Thornton LLP CEO Stephen Chipman. "Indecision stemming from a weak economy and the unknown impact of governmental tax policy and new regulation on business and individuals is causing paralysis, particularly as it relates to major business decisions, including expansion, expenditures and hiring."

Grant Thornton LLP conducted the biannual national survey October 5-15 with 516 US CFOs and senior comptrollers participating.

Key findings include:

  • Much less optimism about US economy over next six months, with 30 percent of the respondents expecting improvement, down from 44 percent six months earlier.
  • More optimism for their own businesses than the US economy overall, with 46 percent expect improvement at their own firms, although that figure is down from 52 percent six months ago.
  • Inflation is creeping into the picture. While 62 percent expect no increase in prices over next six months, 31 percent expect their prices to increase. This is up from 24 percent six months earlier.
  • No economic recovery until second half of 2011 at the earliest, with 42 percent not expecting economic recovery until after 2011, and another 37 percent say recovery won't happen until the second half of 2011.

More findings follow:

Over the next six months, do you expect the US economy to:
 3/099/09 3/1010/10
  Remain the same46%41%45%56%
  Get worse31%10%10%14%


Over the next six months, do you expect your company's financial prospects to:
 3/099/09 3/1010/10
  Remain the same41%43%41%45%
  Get worse27%13%7%9%


Over the next six months, do you expect prices or fees charged by your company to:
 3/099/09 3/1010/10
  Remain the same70%67%67%62%


Over the next six months, do you expect your headcount to:*
 3/099/09 3/1010/10
  Remain the same43%54%49%51%


Are you concerned about a double-dip recession?


When do you believe the US economy will recover?
  Second half of 20103%
  First half of 201118%
  Second half of 201137%
  Later than 201142%


The best way to create jobs is:*
  Cut corporate tax rate35%
  Cut personal income tax rates29%
  Government stimulus programs9%
  R&D credits6%
  Tax credit for new hires22%

* Percentages may not total 100 due to rounding.