Financial Execs Have Bleak Outlook for 2012

By Karen Axelton

How’s the economic outlook for 2012? According to U.S. financial executives polled in the the latest Bank of America Merrill Lynch CFO Outlook survey, not too good.

Just 38 percent of those surveyed in the annual poll said they expect the U.S. economy to expand in 2012, down from 56 percent in last year’s survey and 66 percent in 2009. The CFOs now give the economy a score of 44 out of 100, down from last year’s score of 47 and equal to the lowest score in the survey’s 14-year history.

What specific expectations do CFOs have?

• Some 56 percent expect revenues to grow in 2012, a decline from 64 percent last year.
• Forty-one percent anticipate growth in profit margins, down from 55 percent last year.
• Just 18 percent of CFOs expect to participate in a merger or acquisition in 2012, down from 26 percent a year ago.

What are their big concerns for 2012? Topping the list was the effectiveness of U.S. government leaders, cited as a concern by 70 percent of executives in the survey. Other major worries:

• The U.S. budget deficit: 63 percent
• Healthcare costs: 60 percent
• Unemployment: 58 percent
• Consumer confidence: 55 percent

When it comes to their own companies, the financial concern was healthcare costs, chosen by 56 percent of CFOs. Other top worries were energy costs and consumer confidence, both at 43 percent; cash flow at 42 percent; and revenue growth at 40 percent.

There is some good news in the survey. First, in spite of their pessimistic outlook, just 7 percent of respondents said they expect layoffs at their companies; 48 percent plan to maintain the same number of employees, and 46 percent said they expect to hire.

Another good sign: CFOs were more likely than last year to say lenders have expanded the amount of capital available to them. In addition, just 21 percent expect their cost of capital to increase, down from 27 percent last year.

How do these responses jibe with what you’re experiencing in your business?

Image by Flickr user Mykl Roventine (Creative Commons)

This entry was posted on Tuesday, January 3rd, 2012 at 6:00 am and is filed under Capital Access, Raising Capital, Small Business, small business, Workforce. You can follow any responses to this entry through the RSS 2.0 feed.


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