Finance executives remain wary about the outlook for both U.S. and global economic growth, in line with the views they expressed late last year, according to Treasury & Risk's biannual economic survey. When it comes to scoping out the barriers to growth, the state of the job market remains executives' biggest concern, with fewer respondents citing the European debt crisis and the state of the U.S. housing market as problems than in the previous survey.
More than a quarter (27%) of the executives expect a country or countries to exit the eurozone in the next six months, while a third (34%) say the European debt crisis has affected their company's plans for the coming year.
When asked to rate their outlook on U.S. and global growth over the next six months and the next 12 months on a scale of 1 to 10, executives' readings came in around the middle of that range, little changed from the levels late last year.
Growth Prospects
Asked to describe the U.S. economy over the next six months, more than half (52.4%) of the executives said it was “on a downward trend” or “affected by as many negatives as positives,” up from the 44% who picked those descriptions late last year. And more than three-quarters (78.9%) picked the two most negative descriptions for the global economy.
Biggest Threats
The finance executives surveyed see the sluggish employment market as the biggest barrier to growth, with 34% citing the jobs market, up from 32% late last year. Another 12% cited weak consumer spending, arguably an offshoot of the sluggish jobs market.
Respondents remain concerned about the European debt crisis, although a little less so than they were late last year, with only 22% citing it as the single greatest threat to U.S. economic growth, down from 27% late last year. Just 3% cited the housing crisis and foreclosures as the biggest threat, down from 10% late last year.
Fewer executives expect to see a country exit Europe's common currency than did last year (27% vs. 38%), but the portion of executives who say Europe's debt crisis is affecting company plans has risen slightly (34% vs. 30%).
Rates
The majority of executives see the Federal Reserve holding rates steady over the next 12 months.
The majority (63%) also see the dollar remaining strong against the dollar over the next 12 months, but executives' outlook on dollar/yen is more mixed.
More than half (52.4%) of the respondents see crude oil trading between $80 and $90 a barrel in the next year, while more than a quarter (27.6%) see it heading above $100 a barrel.
Company Plans
Looking ahead, fewer companies plan to reduce the size of their workforce than was the case late last year, but the portion planning to add workers was unchanged at 29%.
More finance executives see increases in capital spending than decreases.
The majority (51%) expect their operating costs to “rise” or “rise significantly,” while the portion expecting operating margins to grow (22%) is exceeded by the executives who see margins shrinking (34%).
See the previous Treasury & Risk Economic Survey here.
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Susan Kelly
Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.
