The results of a survey released Friday show that a majority of Chief Financial Officers and Certified Public Accountants recently surveyed believe the U.S. economy is now in a recession.
A majority of CFOs and CPAs in the survey, done by the University of North Carolina at Chapel Hill's Kenan-Flagler Business School and the Durham-based American Institute of Certified Public Accountants, said they believe the economy has entered a recession. Some 62 percent of respondents said they were pessimistic or very pessimistic about the U.S. economic outlook over the next 12 months.
It's the third straight quarter that business executives predicted slowing growth ahead.
"It is hard to see much good news here," Mark Lang, a professor of accounting at Kenan-Flagler, said in a statement. "There were some hopeful signs in last quarter's survey suggesting that the economy might be bottoming out, but weakness persists across the board. The fact that firms continue to reduce planned growth in capital investment, staff development and employment is particularly troubling since it suggests that slowdown could have longer-term implications."
Only 10 percent of survey respondents expressed optimism about the economy.
The worsening economy appears to be having a dampening effect on the job market. Where I live, in the San Francisco Bay area, this region's CEOs are planning for layoffs ahead.
Bay Area CEOs Planning Layoffs in Next Six Months
Say State Won't Start to Recover For 12 Months - Approximately July, 2009
Marking a significant turn in the economy, for the first time in five years, more CEOs are planning Bay Area layoffs than those planning workforce increases, the Bay Area Council announced today in the release of its quarterly Business Confidence Survey. Indeed, 26 percent are planning layoffs in the next six months - the highest percentage ever recorded by the Survey, which began capturing data in 2001. Twenty percent of executives are planning to increase their workforce, while 51 percent plan to hold steady.
This region has held up admirably during the initial stages of the recession, and Silicon Valley companies have weathered the storm well, but pessimism over the current economy is still leading to layoff plans for this areas' companies:
"Considering the pain in other parts of the country, the Bay Area has weathered the current recession well, but with the planned layoffs - especially among our largest employers - we may yet suffer collateral damage," said Jim Wunderman, President and CEO of the Bay Area Council. "Despite the general pessimism, we are very pleased to see that Silicon Valley and smaller companies throughout the region are still strong and even hiring."
Republican-led recessions (see Dick Nixon's recession going into the 1976 Presidential election and George Bush Sr's recession leading into the 1992 election) have lead us to Democratic presidencies (Carter in 1976 and Clinton in 1992).
Since there is so much pessimism present now in the business community on the part of business CEOs, CFOs, and CPAs, the likelihood of the current recession continuing through this winter appears more likely. So does Barack Obama's election as a result of this news.
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