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CFOs express pessimism on US political climate, anticipate effects of rate hikes

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Polling of large company CFOs also reveals cautious optimism on company prospects and planning for impacts of generational workforce trends.

Chief financial officers believe the polarized political climate observed from both elected officials and the public is real and lasting and continue to express little hope for progress in Washington, D.C., according to polling data obtained from large company CFOs by professional services firm Deloitte.

When asked about their views on the political climate today, a strong majority (83%) of CFOs polled said that the polarization observed in both elected officials and the general public is authentic and long-lasting. Almost as many, 81%, did not believe the recent election of Paul Ryan as Speaker of the House would mark the beginning of greater productivity in Congress, with 61% of those respondents agreeing the problem is more systemic than can be addressed by the election of a new House Speaker.

CFOs were also polled on what external event would have the biggest impact on their companies in 2016. The number one answer was interest rate hikes (44%) followed by exchange rate movements (29%). The other three options – China's economic slowdown, oil prices and geopolitical risks – all tied for third place at 9% each.

The polarization observed in both elected officials and the general public is authentic and long-lasting.

"CFOs we polled last year after the mid-term elections were pessimistic about progress in Washington, D.C., and this year they continue to express doubts about Congressional productivity. A substantial majority of respondents believe the polarization we have seen from elected officials is here to stay," said Sanford A. Cockrell III, national managing partner, Deloitte LLP and global leader of Deloitte's CFO Program. "Beyond Congress, with the Federal Reserve's recent decision to raise the federal funds rate, CFOs are concerned about the effects of interest hikes on their companies."

45% of CFOs polled expressed rising optimism about the financial prospects for their own companies, while 24% thought their company prospects were somewhat or significantly worse.

Talent remains a priority for CFOs. The top two generational trends CFOs say they have prepared the most for are the pending retirement of baby boomers and different working styles of millennials (30% each).

 

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