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Business survey: Economic rebound not coming soon

Posted November 24, 2008
Updated November 25, 2008

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— Don’t expect an economic rebound soon, say chief financial officers and certified public accountants.

In a survey from the University of North Carolina’s Kenan-Flagler Business School and the Durham-based American Institute of Certified Public Accountants, CFOs by an overwhelming margin said they don’t see a recovery for at least seven or eight months and possibly longer.

“Pessimism is at an all-time high, with pessimists outnumbering optimists by a ratio of 16:1,” the authors note in the second sentence.

"The outlook is overwhelmingly pessimistic," added Arleen Thomas, AICPA senior vice president for member competency and development. "Most CPAs working in business and industry don't expect any improvement in the U.S. economy before the second half of 2009 or the first half of 2010."

The survey, which is conducted quarterly, is the fourth consecutive one that concluded the U.S. economy was slowing. However, the respondents listing themselves as “very pessimistic” hit 18 percent – triple the percentage of the previous survey.

More CFOs also are concerned about their own firms.

"Up to now, respondents have generally been pessimistic about the economy as a whole but relatively optimistic about their own companies," said Mark Lang, am accounting professor at UNC-CH. "More respondents now anticipate decreases in revenues, profits and reduced hiring for their own organizations."

The gloom is reflected in several questions of the survey:

  • Capital spending – 39.7 percent expect cuts, up from 24.8 percent in July and 22.8 percent in April
  • Facilities closings – 9.9 percent, up from 7.1 percent in July and 7.5 percent in April
  • Layoffs – 31 percent, up from 18.7 percent in July and 16.3 percent in April
  • Hiring freezes – 36.2 percent, up from 23.3 percent in July and 22.6 percent in April

However, the economic hard times apparently are not sparking a surge in outsourcing of jobs. The percentage of those surveyed  saying their firms plan to outsource dropped to 7.8 percent from 9.5 percent in July and 9.2 percent in April.

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  • Funky Neighbor LEE Nov 25, 2008

    It's hard to be optomistic when what little specifics were rolled out yesterday by Prez Elect was a Gov. Works Program.

  • Just Once Nov 25, 2008

    This is a difficult time. But it is setting up the next round of growth. Plentiful labor - which we have not had in a long time. The marginal businesses are closing and will make way for the next round of small business.

    We will make it through.

  • NoLiberals Nov 25, 2008

    This article was written just to make Obama look like the man on the white horse riding in and saving the day when the economy turns around early next year. He can say see I am the greatest when in actuality the Bush administration has already addressed the issue and put actions in place to bring the economy back around.

  • THE ETERNAL Nov 24, 2008

    This is a great time to be alive. Good times are here.

  • chickentender63 Nov 24, 2008

    "I think that things are going to start getting better soon. Reason? Gas prices have dropped over $2 a gallon. If it keeps up like that, then people who used to pay $80 to fill up their SUV will now have $50 extra to spend every week (if you fill up every week) since it only costs $30 to fill the tank. $200 bucks extra a month ain't bad to help spark an economy."
    mjjunk

    Ah, hate to tell you though, the extra money we are saving at the pumps right now, was money we never had in the first place. It was taken from our grocery budget or something else just in order to have the money for gas.

    So, at this point, I may just be able to use it for what it was originaly intended and budgeted for. To pay other bills.

  • mjjunk Nov 24, 2008

    I think that things are going to start getting better soon. Reason? Gas prices have dropped over $2 a gallon. If it keeps up like that, then people who used to pay $80 to fill up their SUV will now have $50 extra to spend every week (if you fill up every week) since it only costs $30 to fill the tank. $200 bucks extra a month ain't bad to help spark an economy.

  • colliedave Nov 24, 2008

    What is triggering the pessimism? The fear Obama will raise taxes and seize individuals 401-Ks?

    That the "green" movement away from fossil fuels will increase costs across the board?

    That Obama will implement a wind-fall profit tax against the oil companies causing them to raise prices with the higher fuel costs causing price increases across the board?

    That everyone in the country will want to do as a laid-off UAW worker does and have a lifetime of 80% pay plus benefits for no work?

  • whatelseisnew Nov 24, 2008

    I find it encouraging that Obama might be backing away from raising taxes. Hopefully, Congress will go along with that. Otherwise, we will be headed to a Depression.

  • itsnotmeiswear Nov 24, 2008

    This problem is simply about people wanting to live above to their means and getting credit poor. People have been talking about the housing bubble for a couple of years and now everyone acts like they are surprised. Even with rising incomes people were just broke at a higher level and fooling themselves.

    I was at a conference the other day and a leading economist said it is going to be 4+ years before NC is back to the level it was in 2007 so hang on.

  • whatelseisnew Nov 24, 2008

    trafalgerfountain - actually I would like to thank all the fools that put Democrats into the Congress. They created this entire mess.

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