Fears of a double-dip recession have increased, with more than half of financial executives predicting another downturn, according to a new survey, and most expecting job recovery to lag into 2011.
The survey, by budgeting software developer Adaptive Planning and the Business Performance Management Forum, also found, however, that businesses are increasingly optimistic about the state of the economy, particularly in the midsized business sector.
The Q1 2010 Business Volatility and Variables Survey revealed that 51 percent of the financial executives surveyed predict a W-shaped recovery, up from 46 percent a quarter ago, and 72 percent anticipate that a recovery will not occur until the second half of 2010 or later. In addition, 67 percent expect that a meaningful improvement in jobs will not occur until 2011 or beyond. But respondents also reported increasing optimism. The surveys index of current conditions, which compares current economic conditions with those of six months ago, increased to 52.25 from 44.50 in October 2009. This marked the third consecutive quarterly increase and the first time that the index reflected a more positive than negative outlook.
In addition, respondents have brighter expectations for their companies than for the overall economy. Fifty-five percent expect revenue growth for their company over the next six months, while 25 percent expect to add jobs more than the 17 percent that project jobs growth from the broader economy in the next two quarters.
A number of factors indicate that small and midsized companies could lead the way out of the recession. Employee growth expectations in the next six months are about three times higher in the small (31 percent) and midsized (27 percent) company sectors than for large organizations (only 10 percent). Midsized organizations are much more upbeat about the future, with 49 percent expecting economic improvements in the next six months versus only 34 percent of large companies.
Overall economic uncertainty remains high, particularly with smaller companies (61 percent) and midsized companies (50 percent) compared to large organizations (39 percent). Nearly half (49 percent) came in under their revenue plan last quarter, though some of this was offset by lower than expected expenses (36 percent). Economic uncertainty and ongoing underperformance versus plans continue to drive an increased need for frequent scenario planning and what-if analysis, with 59 percent of the respondents expecting to do so more often next quarter.
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