Economic experts look to CFOs to gauge the economy. Use what they’re saying right now to help plan your business’s future.
There is never a shortage of so-called experts on television, radio and the Web talking about what the economy will do next. Everyone has an opinion and seldom is a consensus reached unless it’s to state the obvious. Having a clear understanding of what our economy will do is essential for small-business owners making plans for the remainder of 2012 and 2013. If conditions will improve then it’s time to start ramping up; if they are expected to get worse then it’s better to preserve cash for the time being. Who can we credibly believe?
Listen to the Pros
In general, it’s best to ignore the cacophony of talking heads in the media. They are mostly paid to provide opinions in real-time and there are limited consequences if their opinions turn out to be wrong. The chief financial officers and financial directors of companies are a better source of information. They are paid to manage the finances of a company, understand where the economy is heading, adapt based on their premise and have real consequences to their actions.
Collectively the CFOs of the largest companies in the U.S. are responsible for managing trillions of dollars in assets. With so much at stake, their opinions are not only valid, but the decisions they make play a role in shifting the direction of the U.S. economy. Every quarter Bank of America Merrill Lynch conducts in-depth interviews with the leading CFOs in the country to ascertain their views on the direction of the economy and how their companies are responding.
CFO Predictions
The most recent interviews and surveys with CFOs reveal the following key conclusions:
The U.S. economy will grow over the next year. At the beginning of 2012 only 38 percent of senior financial decision makers believed the U.S. economy would grow over the subsequent year; that figure now stands at 63 percent. This optimism exists between both the service and manufacturing sectors.
Companies have adjusted their projections to reflect this optimism. Some 64 percent of senior financial decision makers have projected increased sales relative to last year and the majority is also projecting an increase in profits.
