Earlier this year, 63% of CFOs had confidence in economic growth. But now? Only 36% share that positive outlook. And 2013 could be the reason why.
According to a CFO Outlook survey by Bank of America Merrill Lynch, CFOs’ confidence in economic growth declined, and have become more cautious due to concerns over impacts to the nation’s economy.
As mentioned, 63% of CFOs surveyed felt confident in economic growth according to the same survey which was administered in spring of this year.
On average, CFOs gave the current U.S. economy an average score of 53 out of 100, the same as in the spring. The global economy scored 45, down from 47. Confidence in their own 2012 performance was down too, with 60% expecting higher revenues, down from 64% in the spring.
Only 44% expect higher profit margins, compared to 50% from the spring, and 46% of CFOs predict more hiring this year, down from 51%.
In the global spotlight
In an ironic twist, it’s interesting to see that CFOs grade the world economy worse off than the US economy, when in fact the rest of the world waits with bated breath to see if both sides of the aisle in Washington can work out their differences and avoid plunging off the fiscal cliff.
The main problem is the huge divide in Washington. A win for Obama in 2012 means, most likely, a Senate controlled by the right and a harsher divide between the executive and legislative branch. There are some who see the partisanship on both sides of the aisle growing to new extremes, stifling any progress that can be made.
“The level of political partisanship in Washington is higher than it’s ever been, and that is making it much harder to deal sensibly with some of the economic and other problems America is facing,” Xenia Dormandy, senior fellow at London’s Chatham House, said to Reuters.
Though politicians here in the U.S. expect to avoid falling off the fiscal cliff, others around the world are pessimistic. One European economist, who refused to give his name to Reuters, claimed the U.S. was becoming like California — a dynamic economy that’s unwilling to compromise.
What are your views on the upcoming fiscal cliff? Are you going into 2013 with confidence? Let us know in the comments below.