NEW YORK (MainStreet) -- A new study of mid-market U.S. chief financial officers shows marked optimism about the U.S. economy this year. That could lead to more hiring and better financial conditions for consumers.
Americans could use some good news, as the economy continues its strange, Kabuki-like dance of “one step forward and one step back” over the past few months.
To get that good news from a group of senior company executives might seem odd, but consumers will take a financial shot in the arm wherever they can get it.
A new survey from GE Capital shows that those CFOs (495 were included in the study) are increasingly optimistic about the U.S. economy, compared to a similar study by GE Capital six months ago.
Consumers likely know that when CFOs, who handle the purse strings at their companies, are sunnier about the prospects of the U.S. economy, more jobs should be coming down the corporate pipeline.
At least, that’s the takeaway from GE Capital.
“Mid-market CFOs are more optimistic than six months ago, despite the European fiscal crisis and inconsistent job growth,” Dan Henson, president and CEO of GE Capital, said in a statement. “A larger majority sees top-line growth and stable or better profits this year, and more will be hiring. These companies have access to affordable capital, which in 2012 is most likely to be targeted for investment to finance growth and to purchase equipment.”
When financial services companies like GE Capital are more amenable to providing credit for mid-market companies, that helps consumers in myriad ways.
More credit and financing means more spending not just on new hires, but on products and services from other companies that, in turn, can hire more workers on their own, further speeding up the economy.
With more jobs filled, and more money lining worker’s pockets, consumers spend more, feel more confident about their own financial situations, see the values of their homes stabilize, and generally, exhale a bit. That’s what stronger economic sentiment from lugged-in financial executives, and easier credit from financial institutions, can do for the Great American Consumer.
The good news is GE Capital expects that “credit loosening” to continue.
“This outlook is generally consistent with what we are seeing in our own, mid-market financing businesses, as our total financing activity was up 15% in 2011 and our pipeline of new business is up 16% at the end of the first quarter,” Henson says. “We’re also seen consistent improvement over the last three years in the companies in our loan portfolio, with pretax cash flow up 10% again this year.”
GE Capital reports the “food, beverage & agriculture CFOs were the most positive, and healthcare companies had the least favorable views.”
Here are some more takeaways from the GE Capital study:
- 94% expect the US economy to grow or be stable this year, up 14 points, with 23% shifting to a growth outlook.
- 87% anticipate their industry to grow or be stable this year, even with six months ago, with 9% shifting to a growth outlook.
- 91% expect company revenues to grow or be stable this year, with 67% seeing an increase, up 5%.
- 81% expect company profits to grow or be stable in 2012, up 8%.
GE Capital also says that CFOs believe the hiring outlook is brighter, with 74% of CFOs planning to hire this year, 6% higher than six months ago.
Consumers can’t base their entire financial outlook on what 495 CFOs say about the economy. But they can take some solace that those same CFOs think the economy is, at long, long last, coming out of the shadows.