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Deloitte: Fiscal Cliff Concerns Depress Investment

By Rob Starr, Content Manager,

According to Deloitte’s Q4 CFO Signals™ survey, the fiscal cliff’s detrimental effects topped CFOs’ list of most worrisome risks in the fourth quarter and dampened their outlooks. In response, CFOs are tempering their expectations for 2013 capital spending and domestic hiring.

“Despite recent clarity on the fiscal cliff, CFOs remain understandably cautious with their cash,” said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. “Between the uncertainty stemming from the lengthy political stalemate in the U.S. and the continued global economic volatility, CFOs have very little visibility into the future – and hence very little comfort in investing for growth.”

Caution among CFOs is being felt particularly in their outlook for capital spending, which is expected to rise just 4.2* percent, below last quarter’s survey low 4.6* percent. In addition, R&D investment hit its lowest expected growth rate on record at 2.7* percent (3.0* percent last quarter), as did marketing/advertising, which is only expected to rise 2.0* percent (3.5* percent last quarter). Perhaps more worrisome, employment expectations have remained dismal. Domestic hiring is expected to rise just 1.0 percent (up slightly from 0.6* percent) overall with 28 percent of CFOs now expecting cuts – a new survey high.

The Deloitte CFO Signals survey was conducted for the fourth quarter of 2012. Seventy-seven percent of the 86 CFO respondents were from companies with more than $1 billion in annual revenues and three fourths were from publicly traded companies.

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