CFOs optimistic about U.S. economy, but have big worry too
The CFOS expect to grow, invest in technology and invest in employees. They are continually working on data security to fend off cyber thieves, and the No. 1 thing that keeps them up at night is the cost of healthcare.
Eighty-nine percent of CFOs expect their company’s sales to grow in 2016. About 23 percent say their growth strategy includes the merger or acquisition of another company.
“This is the first time we’ve seen this since 2008; 54 percent of CFOs plan to hire to additional full time employees – that is the highest mark since 2008,” Borthwick said. “Only 5 percent plan to layoff employees.
On a 100-point index, with zero being extremely weak and 100 being extremely strong, CFOs give the U.S. economy an average score of 61 – the highest of the last eight years.
Ninety percent of CFOs believe the U.S. economy will expand or remain the same. And the top factors that CFOs feel will impact the U.S. economy in 2016 are the elections and healthcare costs.
If interest rates were to rise, 70 percent of CFOs surveyed say it would have no impact on how they would invest their working capital, maintaining their current allocation of instruments and deposits. This is up significantly from 51 percent in 2015, suggesting that CFOs previously made adjustments in anticipation of rising interest rates, Borthwick said.
But there is a gap in the feeling of optimism for the U.S. economy and for the global economy.
“They are slightly less optimistic about world economy,” Borthwick said.
About 65 percent of the CFOs projecting growth in their companies say their firm’s growth will be exclusively in the U.S.
But they are not shying away too much. About 61 percent of CFOs say they already have some foreign market involvement. And 17 percent say they will increase their foreign operations within the next two years.
So what keeps them up at night? Healthcare cost is their No. 1 concern – the same top concern for three years running. About 39 percent of CFOs listed healthcare costs as something they worry about and a potential threat to their business. That concern tops weak domestic demand, competition and shortage of skilled talent.
Still, they are less worried about healthcare after a couple of years of implementing the costs, Borthwick said.
“All of these risk factors are lower, which speaks to a less volatile world,” he said.
Monica Mendoza covers banking and financial services, legal services, the economy and economic development, and sports business and contributes to the "Finance & Law" blog. Phone: 303-803-9230.