Optimism among CFOs about the U.S. economy and their own companies fell precipitously in the third quarter, according to a new survey.
The quarterly survey by Financial Executives International and Baruch College's Zicklin School of Business found that optimism about the economy fell to an all-time low in the third quarter among the 300 corporate CFOs surveyed, and also dipped when the CFOs were asked about their own companies' prospects. CFOs said they are making cutbacks in technology and capital spending, hiring, and inventory.
CFOs were also asked about their preferences in the presidential race. Sixty-two percent said that Sen. John McCain, R-Ariz., would be most beneficial to their company, while 15 percent indicated Sen. Barack Obama, D-Ill., would be best. This represents a small decrease in McCain's popularity among CFOs since the second quarter and a small increase for Obama's (71 percent selected McCain and 13 percent selected Obama).
However, 26 percent felt that neither candidate would be most beneficial for resolving the current economic crisis. Forty-six percent believed McCain would be most beneficial for resolving the crisis, while 19 percent selected Obama.
Seventy-two percent of the CFOs agree with government bailouts, but 80 percent felt that increased regulation and oversight is needed in the financial sector. Recommendations for immediate regulatory actions include a ban on mark-to-market accounting except for publicly traded stock with real liquidity (46 percent), and instituting permanent restrictions of short selling for all companies (35 percent).
Eighty-two percent of CFOs agreed with Congress's decision to pass the Emergency Economic Stabilization Act. Two-thirds of CFOs felt the ultimate cost of the bailout plan for taxpayers would be $500 billion or less.
