Recession to last through 2009, chief financial officers warn in Duke survey

Posted December 10, 2008

— Don’t expect the global recession to end any time soon.

That’s the dreary outlook from the quarterly “Global Business Outlook Survey” from Duke University and CFO Magazine.

In fact, pessimism among the 1,275 chief financial officers who participated in the quarterly survey is the worst in its 12-plus-year history.

According to CFOs, the recession will last through 2009.

As a result, most CFOs said their companies would cut jobs, slash spending and incur financial losses.

“Throughout the history of our survey, CFOs have shown remarkable ability to predict future economic conditions,” said John Graham, the director of the survey and a finance professor at the Duke Fuqua School of Business. “Therefore, the record pessimism CFOs are currently expressing is ominous. Eighty percent of U.S. CFOs have grown more pessimistic about the economic outlook for 2009, and pessimists outnumber optimists by a 9-to-1 margin.”

The survey results run somewhat counter to some other recent projections.

In North Carolina, for example, the state’s economy will begin to grow out of the current recession in the second quarter of 2009, according to UNC-Charlotte economist John Connaughton.

However, by the time the economic downturn ends, it will be the longest in 26 years, Connaughton wrote in a quarterly assessment published Tuesday. And even when the recovery occurs, he noted, it will be “modest.”

Also on Tuesday, the employment services firm Manpower reported that many U.S. employers, including a slightly higher percentage in Raleigh-Cary and in Durham, were planning to add rather than cut workers in the first quarter next year.

Little positive news could be found in the Duke/CFO report, however. And Michael Walden, an economist at North Carolina State University, said the survey didn’t surprise him.

“The poor sentiment about the economy expressed by CFOs is in line with forecasts for a challenging business climate in 2009,” he told “Concerns about credit access, policy direction, and consumer buying are all worries we would expect when the economy is in a deep recession.”

Sixty-two percent of CFOs at among companies hit by the tight credit crisis reported that they could not get “credit they need,” the survey said.

Unemployment, which is already at 7 percent in North Carolina and nearing that mark nationally, will increase across the globe, but most sharply in the U.S. and Europe, the CFOs predicted.

Capital spending will drop 10 percent “in all regions,” according to the survey.

In the U.S., 81 percent of CFOs are pessimistic about the economy; in Europe and Asia, that percentage hit 85. The U.S. percentage doubled from the previous quarter.

A recovery will not come before the fourth quarter of next year or later, according to almost 60 percent of CFOs in the U.S. and 71 percent in Europe.

Walden did see one positive note for technology-related firms.

“One interesting aspect I noted was the expected 10 percent cut in capital spending but only 4 percent cut in technology spending,” he said. “This further indicates the increasing importance of technology in the globalized economy – that CFOs are trying to protect this component of their inputs even in the face of extreme uncertainty.”


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  • hkypky Dec 10, 2008

    whatelseisnew: Agreed that the current state of the economy is not completely the result of the media nor will be saved by it. However, I do believe it would be inaccurate to say the the media plays no role at all.

    Ever listened to the evening news or one of those cable (financial) news programs where their 10 second summary of the days market results or the forecast for the opening of overseas markets reads like a combination of the Playboy Likes/Dislikes, Glamour Do's/Don'ts, and the opening or closing of an episode of Dr. Phil?

  • Bob Sidel Dec 10, 2008

    socialist? you must be referring to george W, the current president who is redistributing the wealth to all the bankrupt companies. That wont happen when obama takes office. hahaha

  • now Dec 10, 2008

    Oh no, Bob Sidel, Bush's legacy ends January 20, 2009. We were told for 8 years that a previous administration cannot be blamed by the Socialist, so after January 20, 2009, it is the Messiah's problem. That what we have constatly been told so I am trying to cross the isle and get along and respect what the Socialist told me.

  • SEOpro Dec 10, 2008

    strawberrysw4 - the media is actually quite the opposite. They couldn't even bring themselves to use the "R" word until a full YEAR after the recession actually started (government wouldn't either). We out here in the "real world" knew what was going on and just because "they" wouldn't SAY recession didn't do anything to keep it from happening. So, their words, or lack of words, aren't so powerful as to sway what is going on. The recession is in full swing because of the actions of the greedy bankers.

    AND - unemployment doesn't last for months. It lasted 6 weeks when I was laid off in SC. May be different by a week or two in other states, but it is very limited.

  • itsnews2me Dec 10, 2008

    "Go into your local bank and look, there is a sign telling you that the money is backed by 'faith and credit'."

    In God We Trust! (it says so, right there on the money!)

  • Bob Sidel Dec 10, 2008

    "For Sidel, the Democrats set out to destroy the economy in order to win the election and they succeeded......Next they will be dictating who we go to for medical help"

    they should suggest you to seek a good psychiatrist

  • 5Rs Dec 10, 2008

    garnerwolf1, the latest expression is "We HOPE at the end of next year we still have some CHANGE in our pockeets". For Sidel, the Democrats set out to destroy the economy in order to win the election and they succeeded. Congressmen (Frank and cronies) have no clue on how to run a business and they are DICTATING to auto companies, oil companies, financial companies how to run their business? Next they will be dictating who we go to for medical help, shopping, doesn't this bother you?

  • Garnerwolf1 Dec 10, 2008

    That's not what you koolaid drinkers were saying prior to the election. At the end of the day Obama is a politican. Enough said. In addition, he is the President-elect. He's not king or magician. There is very little he can do without the support of Congress. And those people are politicans too.

  • Bob Sidel Dec 10, 2008

    it will take years to clean up bushs mess

  • strawberrysw4 Dec 10, 2008

    Whatelseisnew: Don't be so rude.

    I agree with you to an extent. SOME of those who have lost their jobs don't have enough money for neccessities. (Heck..why save money for the rainy days when you can depend on unemployment for 9 months, but that's a whole different discussion).

    There are still plenty of people that have excess money to spend but are afraid to becuase of the fear the media has generated.

    Then, when they don't spend money, companies close and people get laid off. Layoffs are part of the cycle, but people not spending money is what triggers it.

    I said the media was PARTIALLY to blame. They're fueling the fire. Example: This article being a headline, while the article about stocks rising, is in the background. That's the negative reporting I am talking about.