Florham Park, N.J. and New York — With the 2004 election just three months away and campaign promises popping up more frequently than summer barbecues, chief financial officers polled by Financial Executives International indicated that incumbent George W. Bush ranked ahead of Democratic challenger John Kerry in critical areas such as the economy and homeland security.

Nearly 70 percent of the CFOs surveyed recently by FEI and Baruch College’s Zicklin School of Business, in FEI’s quarterly “CFO Outlook Survey,” felt that President Bush was better on the economy, while just over 75 percent ranked him ahead of Senator Kerry on homeland security.

Respondents also opted for Bush with regard to foreign policy and oil prices, with 57 percent and nearly 49 percent, respectively.

Meanwhile, amidst fears about the dramatic rise in outsourcing and its effect in the U.S. labor force — particularly in accounting and finance — some 93 percent of those in the  poll said that they do not anticipate outsourcing either of those functions over the next year.

Other findings of the quarterly CFO poll include:


  • Technology spending and wages are expected to increase at about the same rate as over the last 12 months.
  • Health care costs, numbers of employees and prices are expected to grow, but at a lower rate than over the last year.
  • CFOs expect nearly a tripling of short-term interest rates over the next year, but have little fear that rising interest rates will have much effect on their profits. Some 51 percent of the CFOs felt the markets are only “somewhat” overestimating the rise in rates.
  • Roughly 89 percent of those surveyed said that there will be “little or no impact” or only a “somewhat negative impact” on their company’s earnings if the price of oil per barrel remains at the current levels through the end of 2004.
     “CFOs know interest rate rises are inevitable and have accepted the reality of current oil prices,” said Burton Rothberg, assistant professor of accounting at Baruch College. “They don’t seem worried the trends will interfere with their companies’ growth.”
  • Capital expenditure, revenues, earnings and other indicators are projected to rise. CFOs reported that their capital spending over the past 12 months had increased 7 percent, and they are predicting that it will increase 15 percent over the next 12 months. This is the highest forecasted spending increase in over three years of CFO quarterly surveys. Industries this quarter with the highest expected spending increases are energy and health care, followed by manufacturing.

Overall, CFOs are optimistic about the economy and their  company’s prospects. The CFO economic “optimism index” and company financial prospects optimism index are at their highest since the survey initiated the indices over two years ago. The economic optimism index this quarter is 73.55 out of 100, compared to 62.02 in June 2002. The corporate optimism index is 76.40 this quarter, versus 66.53 in June 2002.“We’ve watched our members’ economic outlook move from gloomy to generally optimistic to bullish. They’re now saying this recovery is underway and robust,” said Colleen Sayther, FEI’s president and chief executive.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access