CFOs are forecasting a 13% increase in capital spending over the next 12 months. Even though they expect long-term interest rates to rise, they are not worried about the effect on their business.
According to the first quarter "CFO Outlook Survey," conducted by Financial Executives International and Baruch College's Zicklin School of Business, CFOs rate their optimism on the economy at 71 out of a possible 100 and their optimism about the financial prospects for their company at 75. Both numbers have been within a two-point range of these rates for the past four quarters.
Survey results seem to confirm broader senior management optimism: earlier in the quarter the Business Roundtable's CEO survey reported a high level of confidence. The CFOs' forecasts also substantiate recent theories that businesses, not consumers, will be leading this economic expansion.
This quarter's 13% forecast for a capital spending increase over the next year closely tracks their forecast from last quarter and remains significantly higher than the 8% increase forecast six months ago.
CFOs Prepared for Rates to Rise
More than 90% of respondents expect long-term interest rates to rise over the next 12 months.