Top executives are worried about the economic strength of their companies and how much the stalled labor market is affecting consumer spending, according to a new report.
The Deloitte CFO Signals Survey also found that 60 percent of the executives say they will be passing along health care costs to employees and 23 percent expect to reduce the scope of benefits offered to some employees.
The first quarter 2014 also saw the chief financial officers markedly more pessimistic than they usually are at the start of the year. Typically the CFO's have reported a first quarter bounce with sales, earnings, and capital spending forecasts peaking before declining across the year. This year there is no bounce and an all-time low earnings forecast.
"We normally see a clear boost in CFOs' sentiment and expectations in the first quarter of a calendar year, but the effects are far weaker this time," Sanford Cockrell III, national managing partner of Deloitte LLP, said in a statement. "There are clear concerns emerging on the stability of the economic recovery, price stagnation and flat employment affecting consumer demand. These are constraining expectations for 2014, but organizations still remain generally focused on growth over risk."
Earnings projections dropped from 12.1 percent a year ago to 7.9 percent - an all-time survey low. Sales growth fell to 4.6 percent compared to 5.4 percent last year and domestic hiring remained flat at 1 percent. They also expected capital spending to 1.3 percentage points to 6.5 percent for the year.
The CFOs expressed some slight optimism for the overall North American and European economies. Some 72 percent of executives expect the North American economy to either improve or at least not get any worse, that's up from 60 percent in the last three months of 2013. For Europe the numbers were better but still pretty bleak with 34 percent saying the economy there will improve or hold steady, up from 23 percent in fourth quarter of last year.
Despite all this the executives expect things to look better for stock holders. Nearly 30 percent of CFOs reported they will significantly increase dividends this year, and roughly the same proportion expect a major buyback.