CFO Survey: What the "smart money" is saying

An Associated Press news headline grabbed my attention this morning. As I was scouring the various financial news feeds looking for something to keep me from pulling out my hair in frustration, I came across the following:

CFOs More Optimistic About U.S. Economy

It had been so long since I last saw a news headline that put the words optimistic and economy together, I almost wrote it off as some sort of hoax. Surely it was a hallucination cruelly toying with me as a mirage tantalizes a thirsty man in the desert. Nevertheless, in desperate hope I tracked down a copy of the survey results that formed the basis of the story.

A Pleasant Surprise

To my pleasant surprise, the news report is correct. There is some small, but discernible increase in CFO optimism. Though still significantly depressed from more normal levels, it appears that pessimism may be bottoming out. (See the graph at the top of this post.)

Of course, many obstacles remain. The credit crisis is having a huge impact on businesses as well as consumers. Over 42% of respondents reported that their businesses have been affected by the cost or availability of credit, up from 27% a year ago. As you might expect, those hardest hit were those with the worst credit. As a result of the challenging economic conditions, more than half of those surveyed say they will delay, reduce or cancel hiring over the next six months. An equal number say they will establish a substantial cost cutting plan. When asked when they expect the U.S. economy to begin recovery, almost 70% expect it to happen sometime after the first quarter of next year.

The Bottom Line

The bottom line I draw from the survey results is that, while confidence appears to be growing, the growth is very tentative. While a recovery is certain, we still have some miles to go before we get out of desert. We need to remain patient.

About the survey

Every quarter, the business school at Duke University teams up with CFO magazine to survey chief financial officers around the world. It's a good survey, drawing strong participation across a wide range of companies and industries. The questions are well-designed and the results are compiled in a rigorous way. In short, I like it. If you want to see the results for the current quarter, go to This site also includes a link to past surveys.