The most recent CFO survey by Duke University reveals that political uncertainty and nervousness could harm business and economic growth in the U.S.
The Q3 2016 survey of more than 1,200 CFOs highlights concerns and issues of businesses of all sizes across a wide variety of industries. This CFO Survey is updated every quarter.
The CFO survey surfaced some of the following key points:
Over one-third of CFOs state that their companies will reduce business investment after the U.S. presidential election regardless of the outcome.
26% of all companies in the U.S. said have already delayed capital investments because of the election.
Revealing low business confidence, most companies due not plan to increase their R&D or capital investments.
On the positive side, most CFOs state that a moderate increase in interest rates will not decrease their capital spending. However, about 1/3 of companies would reduce their spending due to a 1% increase in interest rates.
An increasingly tight labor market is making it harder for businesses to retain and hire the necessary employees. 36% of companies are experiencing difficulties in hiring and employee retention and have growing labor expenses as a result.
CFOs are planning to increase employee wages by 2.9%, which is much higher than the projected 1.6% increase in product prices. In the absence of any other improvements, profit margins will be squeezed.
Despite these pressures, the “Optimism Index” for the U.S. economy increased from 59.4 last quarter to 60.6. This is slightly higher than the long-term average. This seems to be consistent with other surveys about business growth.
Health care expenses, which are another key issues for CFOs, are projected to increase 6.8%.