CFOs have become more optimistic about the US economy and their companies’ future revenue and profit growth, according to a Bank of America executive who spoke Wednesday at the AICPA’s CFO conference in New Orleans.
“Overall, the US economy is not out of the woods yet” said Fabiola Brumley, a senior vice president at BofA. “But CFOs see reasons for renewed optimism.”
BofA conducts quarterly surveys of its CFO clients. In its most recent report, CFOs’ rating of the US economy, on a scale of 0 to 100, improved from 44 in the fourth quarter 2011 to 53 in the first quarter 2012.
The commercial clients BofA polled have not been that confident since early 2011, Brumley said, when their rating was 54.
The survey results showed other improvements in CFOs’ outlooks from the fourth to the first quarter:
- Sixty-three per cent of CFOs expect the US economy to expand in 2012, up from 38% in the fourth quarter.
- Sixty-four per cent project that their companies will generate more revenue, up from 56% in the fourth quarter). And 50% expect more profits (up from 41% in the fourth quarter).
- Twenty-two per cent expect their companies’ operations to grow more than 10% this year.
- As for expansion plans, 31% said they’re targeting new customers, 12% are looking at new geographic markets and 11% are working on product innovations.
About 86% of the CFOs surveyed by BofA work for privately held companies and 63% work for companies generating $20 million to $75 million in annual revenue, the business segment most likely to hire and grow.
CFOs’ optimism was tempered by concerns ranging from oil prices to healthcare costs, according to the survey results that came out in January and May.
Other findings included:
- Oil prices moved to the top of the worry list. In the fourth quarter, it ranked eighth among the 10 biggest concerns.
- Concern about a lack of governmental leadership has been high on the list for about a year. Currently, effectiveness of government leaders is the second biggest concern amongst CFOs polled by BofA.
- The US budget deficit, healthcare costs and consumer confidence followed in short order in both quarters.
- The housing market, corporate tax rates and credit availability also remained among the top 10 concerns in both quarters.
- In the first quarter, the European debt crisis for the first time entered the CFOs’ list of concerns at No. 13.
—Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.
