Chief financial officers fear that inflation will rise after Alan Greenspan steps down, and are pessimistic about the U.S. economy, according to a new survey out of Duke University.

Other top CFO concerns include high health care costs and increasing interest rates. The executives predict only modest employment growth for the coming year, and 20 percent say that they expect to reduce employment -- however, CFOs still expect solid earnings growth for their own companies.

Relative to the low inflation of the last decade of the Greenspan era, 81.5 percent of CFOs believe that inflation will be higher over the coming decade. CFOs expect their own companies to raise prices by 3 percent in 2006, continuing an upward trend over the past year.

"The pivotal result in the entire survey is the CFOs' perceptions of inflation in their own product prices. The doubling of inflation expectations over the past year is a disturbing trend," said Campbell Harvey, professor of finance at Duke's Fuqua School of Business and the founding director of the survey, in a statement. "There is a strong asymmetry in inflation expectations: 81.5 percent of respondents think inflation will rise, while only 0.5 percent believe inflation will fall."

Business optimism about the U.S. economy remains low. Nearly 39 percent of CFOs are more pessimistic about the national economy now relative to how they felt last quarter, while 32.1 percent say that they are more optimistic. The level of optimism is down sharply from one year ago, when 54.2 percent of CFOs said that they were growing more optimistic. European CFOs are somewhat more optimistic about their national economies, while Asian firms are upbeat: 59.2 percent of Asian CFOs say that they have growing optimism about their economies.The year-end 2005 Business Outlook survey asked chief financial officers from a broad range of public and private companies globally about their expectations for the economy. The survey of European CFOs was conducted jointly with RSM Erasmus University in the Netherlands. The survey was concluded Nov. 20 and generated responses from 811 CFOs, including 401 from the U.S., 132 from Asia and 278 from Europe.

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