Hard Times

Alberto Ruggierl

A quarterly survey of chief financial officers spanning the global economy, conducted by the Fuqua School of Business in cooperation with CFO Magazine, found that CFOs are more pessimistic than ever before. The survey, which has measured CFO opinions for the last fifty-one consecutive quarters, asked 1,275 executives for their outlooks in the deepening recession. Nearly two-thirds of respondents believe the recession will last at least until the end of this year, and a majority said that their firms would cut jobs, reduce spending, and post losses in 2009.

Among the CFOs' chief concerns are a decline of consumer demand, weakening credit markets, and job losses. Overall, they lack confidence in the lending institutions they do business with and foresee cutting 5 percent of their workforce. The survey has been shown to accurately predict economic conditions.

Campbell Harvey, J. Paul Sticht Professor of international business at Fuqua, predicts that unemployment will rise significantly, but not likely to Depression-era levels. Writing in response to the CFO survey on Duke Research Advantage, a blog maintained by the business school, he maintains that while the U.S. economy will likely hit near double-digit unemployment, it won't reach the 20 percent rate of the Great Depression. Harvey says service jobs, such as those in health care, tend to be less cyclical than the manufacturing jobs that predominated in the 1930s.