Deloitte CFO Signals™ Survey: Fiscal Cliff Concerns Depress Investment and Hiring at America's Largest Companies

Dour expectations for investment in capital spending, R&D, marketing, and staffing

Jan 08, 2013, 09:30 ET from Deloitte

NEW YORK, Jan. 8, 2013 /PRNewswire/ -- 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.

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The quarterly survey, which tracks the thinking and actions of chief financial officers (CFOs) representing North America's largest companies averaging more than $5B in annual revenue, found that 40 percent of CFOs reported rising pessimism this quarter about their companies' prospects, similar to last quarter. But fewer expressed rising optimism.In the U.S., net optimism (the difference between the percent of CFOs expressing rising and falling optimism) fell from zero two quarters ago and -16 last quarter to -21 this quarter.

"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."

It is not that CFOs feared a lack of resolution. In fact, only one in five expected Washington to "go over the cliff." Most expected modification or delay of scheduled spending cuts, and about 60 percent expected the Democrats to prevail on taxes, with rates going up for couples earning over $250,000. They did name fiscal policy as their top priority area for better policy clarity going forward with corporate tax policy and regulatory policy a distant second and third.

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.

Still, some CFO expectations did rebound from last quarter's survey lows. For example, CFO expectations for year-over-year sales growth rose (5.6* percent versus 4.8* percent last quarter), as did earnings growth (10.9* percent this quarter versus 8.0* percent last quarter).

"Companies faced remarkable external uncertainty in 2012 – including the fate of health care reform, the outcome of U.S. elections, the 'fiscal cliff' resolution, and the trajectory of European and other economies," said Greg Dickinson, director, North American CFO Survey, Deloitte LLP. "But CFOs' year-over-year projections have stayed positive (modest, but positive), which may bode well for what will happen as we get better clarity on some fronts."

Additional findings from the Deloitte CFO Signals survey include: (estimates are adjusted averages to reduce the effect of outliers):

  • The European crisis still ranks in CFOs' top three "most worrisome risks," but expectations for a continuing status quo may be stifling preparation for other scenarios. In fact, about 60 percent of CFOs have no plans for addressing changes in the European situation – either because they have planned only for the status quo, or because they have no specific plans for any particular scenario.
  • Nearly two thirds of CFOs classify themselves as Republican (75 percent of U.S. CFOs). Only about 20 percent, however, place themselves at the poles of the political spectrum.
  • Improving finance's ability to be a business partner is a constant struggle. To better serve their business units, CFOs said they most want to improve finance's capabilities around strategic planning (52 percent), IT/information management (48 percent), and budgeting and financial planning (47 percent).
  • CFOs view the transformational impact of technology as far reaching. They name mobility, social business, and customer data as the top technologies that will transform their businesses.

To download a copy of the survey, please visit:  

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

About The Deloitte CFO Signals™ Survey
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.

Each quarterly CFO Signals report analyzes CFOs' opinions in five areas:  CFO career, finance organization, company, industry, and economy. For more information about Deloitte's CFO Signals, or to participate in the survey, please contact

About Deloitte's CFO Program
The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands. The Program harnesses our organization's broad capabilities to deliver forward thinking and fresh insights for every stage of a CFO's career – helping CFOs manage the complexities of their roles, tackle their company's most compelling challenges, and adapt to strategic shifts in the market. For more information about Deloitte's CFO Program, please contact or visit

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SOURCE Deloitte