US finance executives overwhelmingly believe that resolving America’s long-term fiscal and deficit issues will be critical to economic growth and that both sides of the political spectrum must be able to solve these issues by working together, according to a survey released by the Association for Financial Professionals (AFP).
The survey, taken on 28 October among attendees at the 2013 AFP annual conference in Las Vegas, asked about business and economic conditions. It generated 1,136 responses from senior finance and treasury executives across a broad range of companies, typically with annual revenues over US$500m.
Chief financial officers (CFOs), corporate treasurers and other senior level financial professionals were asked how the current US political and economic environment would impact corporate treasury and finance operations. Of respondents, 78% believe a resolution to fiscal and deficit issues must be achieved before sustained economic growth can occur.
In addition, 51% of executives believe economic growth is contingent upon a positive and sustained resolution to political gridlock and an improvement in the tone of political debate. In fact, the continued inability of the White House and Congress to reach long-term consensus on critical issues affecting business and the economy has made companies more hesitant to invest for future growth, with half of executives surveyed saying the impasse has made them reluctant to hire and invest in the US.
“It is time to move on,” said Jim Kaitz, AFP’s president and chief executive officer (CEO). “Corporations are saying quite clearly that they won’t hire or expand in the US until we find a way to debate in a civilised manner and find the best way to put our house in order.”
Other actions that executives believe are necessary for economic growth are reduced regulatory complexity and uncertainty (44%), a resolution to uncertainty around the implementation and future of the US Affordable Care Act (31%), and a reduction in corporate tax rates (25%).
Looking ahead, the vast majority of finance executives expect the Federal Reserve to begin to taper its accommodative monetary policies sometime in 2014, but more than half do not expect the taper to begin until at least the second half of 2014 or during 2015. In the current interest rate environment, three fifths of companies are taking advantage of still lower interest rates, with the expectation that rates will eventually rise, by refinancing long-term debt or issuing new debt.
The full survey can be accessed
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