CFO SignalsTM: 2012 Q3 Results

Economic and political worries depress large company CFOs’ expectations for earnings, investment, and hiring

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Results: CFO SignalsTM Q3

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Highlights: CFO SignalsTM Q3

For several quarters, North American CFOs have voiced strong and growing concerns about worsening conditions in Europe, global economic deceleration, slow growth at home, and governments’ struggles to stem the fallout and promote growth. But despite their worries, CFOs have remained mostly optimistic about their companies’ prospects and have expressed solid year-over-year performance expectations.

In fact, a bright spot in the aftermath of the financial crisis has been corporate performance, which has held up quite well despite volatile economic conditions. Large companies have looked under every stone for ways to bolster their performance – better focus, scaling back in lower-margin businesses, and getting more efficient in both the front- and back-office – often with remarkable success. But last quarter’s survey results suggested the returns were beginning to run out. And this quarter’s findings solidified this view, recording the sharpest decline in expectations we have seen in the two-and-a-half-year history of the survey.

CFOs’ expectations for sales and earnings growth both dropped precipitously this quarter, and their expectations for capital investment and hiring followed suit. The presidential election and a fiscal cliff in the U.S. are clearly making CFOs nervous, but this quarter’s findings suggest there may be more to their trepidation than political or policy uncertainty. It may be the case that the levers capable of allowing companies to outperform their underlying economies have mostly been pulled – or at least that the strongest levers have – and that further gains are going to be even tougher to achieve.

Download the CFO SignalsTM Q3 2012 findings above.

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