Study shows optimism for 2015 by U.S. CFOs
Grant Thornton survey shows sustained business confidence
Nearly half of CFOs expect the U.S. economy to improve during the next six months, and only 9 percent expect it to worsen, according to the Grant Thornton LLP 2014 Fall CFO Survey. The biannual survey reflects the insights of more than 1,000 CFOs and other senior financial executives across the U.S.
The survey’s findings indicate that economic optimism has remained stable during the past year despite increasing global uncertainty. In spring 2014, 51 percent of respondents expected the economy to improve during the next six months, compared to 40 percent in fall 2013 and 45 percent in the firm’s spring 2013 survey.
In this environment, the most common growth strategies for businesses in the upcoming year include pursuing organic growth in existing markets (87 percent) and introducing new products or services (72 percent). In addition, more than one-third (37 percent) of companies are considering a merger or acquisition in the next 12 months. For companies with more than
$5 billion in annual revenue, that number is even higher at 60 percent.
“While it’s encouraging that CFOs aren’t expecting contraction, they’re not predicting significant growth either,” said Stephen Chipman, chief executive officer of Grant Thornton. “It’s vital that our country’s political leaders focus now on resolving this uncertainty by advancing comprehensive tax and entitlement reforms to spur economic growth.”
The notion that U.S. economic optimism remains stable amidst increasing global uncertainty correlates with other recent research from Grant Thornton. The Grant Thornton International Business Report found that optimism for the nation’s economic outlook among U.S. business leaders remained strong at a net balance of 69 percent in third quarter 2014 while eurozone optimism dropped to a net balance of 5 percent, down 30 percentage points from the previous quarter. In particular, German optimism plummeted 43 percentage points to just net 36 percent.
“The economic environment in Germany has very significant implications for the U.S. economy and businesses,” added Chipman. “We have yet to realize the domestic repercussions of the weakening eurozone and will be watching the situation closely in the coming months.”
Confidence in the U.S. economy is prevalent throughout the survey results, with 91 percent of respondents expecting their company’s hiring to increase or remain the same in the next six months. In addition, 70 percent of CFOs expect the average cost of an employee’s salary to increase during the next 12 months, up 2 percent from the spring. Approximately one-half (48 percent) of respondents predict that industry financial prospects will improve or significantly improve during the next six months, consistent with 51 percent in the spring.
This is especially true within the manufacturing sector. A majority (51 percent) of manufacturing leaders say they expect their industry’s financial prospects to improve during the next six months.
