Survey Finds CFOs Are Cutting Back, Hunkering Down

By Staff Report

Mar. 28, 2008

CFOs say recession concerns in the U.S. are already tempering their companies’ budgets, spending and hiring, according to the latest survey of CFOs conducted by Financial Executives International and Baruch College’s Zicklin School of Business.

When asked their view of a potential recession in the U.S. in the current year, 41 percent of the CFOs surveyed said they think the U.S. is currently in a recession, while another third think it’s likely to go into a recession in the next six months. Only 18 percent said they did not expect the U.S. to go into a recession in 2008.

Given that pessimistic mood, it’s hardly surprising that 34 percent of the CFOs said they had delayed the implementation of business-related spending during the first quarter of the year.

Last week, for example, General Motors CFO Ray Young indicated the automaker had put some capital projects on hold to help conserve cash.

“What we are hearing from CFOs is, recession or not, they are taking defensive measures to combat the economic slowdown,” said John Elliott, dean of the Zicklin School of Business. “This quarter’s survey revealed that almost half of the CFOs are in agreement with U.S. economists and believe we are currently in a recession.”

Finance chiefs are also looking at other ways to rein in costs. Close to half of the CFOs surveyed identified hiring as an area for cutbacks. Nearly a quarter cited layoffs.

Despite the plans for curbing hiring or laying off workers, average net hiring by the survey group’s employers is set to increase 3 percent this year.

“However, that’s down noticeably from prior quarters and most are delaying previous hiring plans,” Elliott said. “They have a budget in place that was set in November or December, but the world looks different now.”

It sure does. The weakening dollar doesn’t seem to be boosting CFOs’ morale, either. While about a third of the finance chiefs reported that the declining dollar has led to increased international sales, those gains appear to be offset in some cases by rising prices. Over half the respondents said they have seen an increase in the costs of commodities and raw materials. And a third said their quarterly earnings have decreased.

Of note to policymakers: When asked about the economic stimulus bill, only 12 percent of CFOs said they would increase equipment purchases to take advantage of the recently passed stimulus bill, which allows for stepped-up depreciation on equipment purchased and placed into service in 2008.

For more on the survey, click here.

Filed by John Goff (with additional reporting by Frank Byrt) of Financial Week [hotlink this, please], a sister publication of Workforce Management. To comment, e-mail

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