Business survey: Economic rebound not coming soon

Posted November 24, 2008 3:24 p.m. EST
Updated November 25, 2008 7:52 a.m. EST

— 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.