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FEI/Baruch Survey: Economic and Business Optimism Shows Strong Improvement from 2012 Levels

Revenue Growth and Expense Control Remain CFOs' Top 2013 Business Challenges

NEW YORK, NY - February 28, 2013 According to the most recent quarterly survey conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business, Chief Financial Officers entered 2013 with improved optimism toward the global and U.S. economies and their businesses, though most still believe a recovery is over a year out. While they still carry the burden of concerns around increasing revenue and controlling expenses, their capital spending is at a normal rate and they are not making drastic cuts to their workforce.

The "CFO Outlook Survey," which polls CFOs of public and private businesses in the U.S. and Europe (Italy and France) on their economic and business confidence and expectations, found that CFOs were more confident than where they stood last quarter. The quarterly optimism index for U.S. CFOs toward their own businesses increased to 69.50 (from 62.7 in the third quarter). Their confidence in the global economy jumped eight points to 52.2, from its near survey low in November 2012 (44.2). U.S. CFOs also reported increased optimism in the U.S. economy this quarter, moving five points to 56.7 (from 51.6 in Q3).This quarter, CFOs in the EU demonstrated improved optimism in these areas from last quarter as well -- their confidence in the global economy rose six points to 51.30 (from 45.2 in Q3), and confidence in their own businesses saw a slight increase (57.50 from 55.70 in Q3). U.S. CFOs continued to forecast higher projections for their business than did their European counterparts, with the highest increases in the areas of capital spending (17%) and technology spending (11%) over the next 12 months. In the U.S., CFOs are also anticipating a nearly 10 percent rise in net earnings and revenue. European CFOs on average expect more subtle increases in these areas, with the highest increases in revenue (4%) and net earnings (3%).

Similar to previous years, revenue growth remains the top business challenge that U.S. CFOs are facing for the first half of 2013 (23% of CFOs in the U.S.; 21% of CFOs in Europe). European CFOs see expense control as their biggest challenge, and it was also high on the list for U.S. CFOs (28% in Europe; 14% in the U.S.). While competition was the third most common choice for EU CFOs (18%); regulatory issues was the third top choice for U.S. CFOs (14%). In terms of economic worries, U.S. CFOs were most concerned about government regulation and consumer spending/demand. In the EU, CFOs' concerns over falling economic production or recession were slightly higher than their concern over consumer spending.

CFOs addressed their expectations about the fate of the Eurozone, which has been a moderate concern over the past few quarters. When asked to rate their concern on a scale of one (not concerned) to five (very concerned), more than half of all European CFOs (72%) selected a "three or higher," and the large majority of U.S. CFOs selected a "three or higher" (86%). CFOs also believe that a recovery in the European economy is more than a year out, with 71 percent of U.S. CFOs and 65 percent of EU CFOs predicting that a recovery would not begin to take place until 2014 or beyond. When asked about the timeframe that a U.S. economic recovery would take place, this quarter, nearly half (43%) of U.S. CFOs believed a recovery would be delayed until at least 2014. About a fifth (22%) think the U.S. would recover at some point in 2013, and over a third (35%) believe the U.S. is already in the midst of a recovery.

"CFO optimism has understandably fluctuated over the past several years, but the fact that optimism levels are near or surpassed where they stood a year ago is an encouraging indicator for the start of 2013," said Linda Allen, Professor of Economics and Finance for the Zicklin School of Business at Baruch College. "While CFOs appear to be more confident this quarter, they remain realistic -- most have some serious concerns about keeping their companies profitable. On a macro -- level, most believe that the instability of the U.S. and European economies is a longer-term issue that will take more than a year to resolve."

CFOs Believe Congress Will Reach U.S. Debt Crisis Outcome
CFOs in both the U.S. and abroad are closely watching Congress' actions surrounding the U.S. debt crisis and critical deadlines for sequestration by the start of March. By and large, they are hoping that Congress will avoid a default on the Government debt, followed by a deficit reduction agreement and U.S. debt downgrade, as more than half of respondents (59% in the U.S., 51% in the EU) indicated that this outcome would have the most negative impact on their business. When asked to predict the most likely outcome by Congress, at the time of polling, the majority of U.S. CFOs (67%) believe that Congress will implement short term increases in the debt ceiling, followed by incremental deficit reduction agreements. CFOs in Europe also offered their predictions on the outcome, and comparably, the majority (59%) believes the most likely outcome will be a long-term agreement to reduce the deficit. About 13 percent of CFOs in the U.S. three percent in Europe anticipate that sequestration will be triggered, with no government shutdowns.

"Congress' ability to control the U.S. debt and deficits will continue to be front and center in the minds of CFOs in the next few months," said Marie Hollein, President and CEO of Financial Executives International. "CFOs in both regions trust that Congress will ultimately come to an agreement, but U.S. CFOs believe that these actions will take place incrementally as we reach key deadlines. With the potential threat of sequestration now looming, the way in which Congress ultimately responds will likely have a significant impact on their optimism this year."

U.S. CFO respondents were also asked about the impact of proposed recommendations by the Financial Stability Oversight Council regarding money market mutual fund reform. Fifty-eight percent of U.S. CFOs felt that that proposed recommendations would not make them less inclined to use money market funds as a liquidity instrument, but the remaining 42 percent stated this would impact their use of these funds.

CFOs Continue to Maintain Workforce; U.S. Still Planning to Hire
CFOs in the U.S expect little change in the unemployment rate in the next six to 12 months. On average, they anticipate it may increase slightly, but will remain below eight percent. European CFOs also expect the unemployment rate to remain around 10 percent within the year. This quarter, most CFOs (83% in the U.S. and 70% in Europe) stated that they have not been forced to reduce headcount over the past 12 months. Forward looking hiring among European respondents was split: 42 percent of European CFOs plan to hire additional employees within the next six months, but a similar number (46%) indicated they will not be hiring. In comparison, the majority of U.S. CFOs (63%) are planning to hire in the next six months, while only 29 percent do not have hiring plans.

Other findings from the CFO Outlook Survey include a CFOs' level of activity in capital spending, their cash positions and access to credit:

  • Capital Spending: CFOs in Europe (57%) continue to spend cautiously in the current climate, along with just over one third (34%) of U.S. CFOs. This quarter however, more than half (57%) of CFOs in the U.S. stated that they are now spending at a normal rate or making ambitious investments in capital expenditures. Only 7 to 8 percent of CFOs in the U.S. and Europe are holding on all investments. Of those CFOs in the U.S. that are making a capital expenditure, they are primarily directing investments toward technology (62%), followed by machinery (30%) and property/land (20%). In Europe, more than half (52%) of those making a capital expenditure are investing in technology, followed by expansion into new and emerging markets (31%) and machinery (30%).
  • Capital and Equity: CFO respondents this quarter were not cash-constrained and were currently holding an average 13 percent of their company's assets in cash (14% for U.S. CFOs and 12% for European CFOs). U.S. CFOs on average held 61 percent of their company's balance sheets in equity, compared with 29 percent in long-term debt obligations. In contrast, CFOs in Europe had approximately 29 percent in long term debt, but about 48 percent in equity. CFOs were most commonly using banks to access capital, followed by equity. The majority of CFOs did not feel that their company is capital constrained in terms of access to funds either from banks or capital markets (81% in the U.S. and 68% in Europe). Nearly a third of CFOs in Europe (32%) feel capital constrained, compared with a small fraction (19%) of those in the U.S.
  • Access to Credit: Eighty-one percent of U.S. CFOs and 66 percent of European CFOs are anticipating no change in their credit situation in the next six months. Fourteen percent of U.S. CFOs believe that it will be easier to access credit six months from now. In Europe, nearly a third of respondents (29%) believe access to credit will be more difficult. This is an improvement from one year ago, when 54 percent of respondents in Europe felt credit would worsen.

Additional Findings: More U.S. CFOs Considering Increasing Budgets and Taking Steps Toward Cyber security
While the large majority of CFOs in both regions have not experienced a cyber-attack on their IT systems within the past 12 months (84% of U.S. CFOs and 96% of EU CFOs), respondents varied by region in their actions toward improving their cyber security. Sixty-nine percent of U.S. CFOs have considered increasing their security budgets in light of the increasing number of major companies that have faced cyber-attacks in the past few years, compared with close to a third (32%) of EU CFOs planning to do so. Similarly, over three-quarters (76%) of U.S. CFOs stated that they are taking specific steps to protect against cyber-attacks -- the most common actions include establishing off-site backup systems/plans (62%) and implementing a cyber-security/IT plan (51%). Among European CFO respondents, only 40 percent stated that they were taking steps to combat cyber-attacks.

Additional findings include detail cyber-attacks CFOs have faced, as well as CFOs plans to retain talent.

Full survey results and historical data comparisons are available at or from Nicole Madison at The study is also available online at the Financial Executives Research Foundation bookstore and on the Baruch College home page at

Overview of the Survey:
This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College's Zicklin School of Business, interviewed 143 corporate CFOs from the United States and 89 corporate CFOs from Italy and France electronically from January 25th -- February 12th. 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. The U.S. survey respondents are members of Financial Executives International; France survey respondents are members of Association Nationale Des Directeurs Financiers Et Du Controle De Gestion (DFCG) and Italy survey respondents are members of Associazione Nazionale Direttori Amministrativi E Finanziari (ANDAF). Financial Executives International has been conducting surveys gauging the country's economic outlook from the perspective of CFOs for more than 12 years.


About FEI:
Financial Executives International 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 at companies from every major industry. FEI enhances member professional development through peer networking, career management services, conferences, teleconferences and publications. Members participate in the activities of 86 chapters, 74 in the U.S., 11 in Canada and 1 in Japan. FEI is headquartered in Morristown, NJ, with additional offices in Washington, D.C. and Toronto. Visit for more information.


About Baruch College:

Baruch College is a senior college in the City University of New York (CUNY) with a total enrollment of more than 17,000 students, who represent 160 countries and speak more than 100 languages. Ranked among the top 15% of U.S. colleges and the No. 5 public regional university, Baruch College is regularly recognized as among the most ethnically diverse colleges in the country. As a public institution with a tradition of academic excellence, Baruch College offers accessibility and opportunity for students from every corner of New York City and from around the world. For more about Baruch College, go to





Nicole Madison of FTI Consulting +1-646-576-8104 or

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