Skip to content

CFO Survey


Drop in Tech, Capital Spending Forecasts

CFOs Worried About PBGC Solvency

FLORHAM PARK, N.J. and NEW YORK, June 9, 2005 — CFO optimism about the U.S. economy and their own companies’ financial prospects is the lowest it has been during the past 12 months.

According to the second quarter “CFO Outlook Survey,” conducted by Financial Executives International and Baruch College’s Zicklin School of Business, the CFO Optimism Index of the U.S. economy is now 68.66, down 7% from 73.55 a year ago. The Optimism Index of CFOs’ own companies’ prospects registers 74.09, a smaller drop of 3% from 76.40 a year ago. CFOs from 186 companies participated in this quarter’s survey.

CFOs are predicting only a 5% increase in capital spending over the next 12 months, less than half their prediction of 13% three months ago. Technology spending is expected to increase 4%, the lowest forecast since June 2003.

Burton Rothberg, Assistant Professor of Accounting at Baruch College noted, "The CFO community paints a mixed, but still generally positive picture of the US economy. The level of optimism of the US economy is down, as would probably be expected as the recovery matures. Recent rises in short term interest rates, oil prices and the US dollar have likely taken some of the shine off the outlook. Nonetheless, the CFOs continue to rate the prospects for their own companies at high levels. This is an important point since it’s information from their own order books."

PBGC A Concern for Most CFOs
Reacting to the Pension Benefit Guaranty Corporation’s assumption of large portions of United Airlines’ $9.8 billion in pension obligations, about two-thirds (65%) of the CFOs are quite or very concerned about the PBGC’s future solvency. The PBGC is not funded by general tax revenues and most CFOs think it should stay that way, despite their concerns. One CFO notes that most taxpayers would be outraged if their tax dollars were being used to fund someone else’s pension benefit.

Seventeen percent of CFOs, however, would approve of using taxpayer dollars to support the financial well-being of the PBGC. “Realistically, general tax funding is inevitable,” forecasts one survey respondent.

If PBGC premiums rose high enough, about a third of the CFOs whose companies offer defined benefit plans would consider a reduction in benefits or would consider no longer offering such a plan.

Rating Agencies Earn a Solid “C”
CFOs whose companies are rated by credit rating agencies were asked about their satisfaction with the accuracy, timeliness and transparency of their ratings. Their satisfaction level was average at best in all categories.

Forty percent of the surveyed CFOs would like to see more entrants in the credit rating business, compared to a third who would not, and 44% believe that oversight of the rating agencies is inadequate, compared to 32% who are satisfied with the oversight.

“Many of our members are expressing frustration regarding the credit rating industry,” said Colleen Cunningham, President and CEO of FEI. “They are not sure of the factors used to make the credit determination. Some see upgrades as slow to happen despite significant positive change at their company. Others are frustrated by the agencies’ lack of accountability for their ratings. I think all would agree, however, that more disclosure, standardized reporting and consistency would create fairer and more accurate credit ratings.”

Health Care Discomfort
CFOs expect health care costs to rise about 8% over the next 12 months, a lower expectation when compared to prior quarters. Since larger companies offer insurers a larger pool over which to spread risk, and usually have more leverage with insurers, they generally report smaller increases in health care.

Revaluation of the Yuan
When asked how a revaluation of the Yuan would affect their company, 39.1% said that it would have no impact at all. Interestingly though, the same amount of companies who say a revaluation would have a small to moderate negative impact (25.1%), equals the number of companies who say that this would have a small to moderate positive impact.

About the Survey
Full survey results will be available June 13 at For information prior to that, please contact

This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 186 corporate CFOs electronically in June. CFOs from both public and private companies and from a broad range of industries, revenues and geographic areas, including some off-shore companies, are represented. Survey respondents are members of Financial Executives International.

Revenue-weighted averages are provided for projected changes in capital and technology spending. Employee-weighted averages are used for projected changes in health care costs.

FEI has been conducting surveys gauging the country’s economic outlook from the perspective of corporate CFOs for the past eight years.

Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 86 chapters, 75 of which are in the United States and 11 in Canada. For more information about FEI, visit

Baruch College, founded in 1847, is a senior college of the City University of New York. The Zicklin School of Business at Baruch College is the largest collegiate school of business in the nation, producing graduates who assume leadership positions in all areas of American business as well as conduct important academic research. Baruch has one of the largest accounting programs in the country whose graduates become practicing CPAs.



Andrew Healy
Chris Allen

Burton Rothberg
Baruch College
Zicklin School of Business