SAN ANTONIO, TEXAS –– November 9, 2010 –– Financial professionals are more likely to expect a positive impact on business conditions from the recent mid-term elections than they are from last week's move by the Federal Reserve to resume quantitative easing, according to a survey of attendees of the annual conference of the Association for Financial Professionals (AFP).
Asked how results of last week's mid-term election would affect business conditions, 54 percent of respondents—including CFOs, treasurers and other financial executives representing companies of a median size of $1.5 billion in annual revenues, as well as bankers—said the elections would have a beneficial impact on general business conditions. In addition, 51 percent said election results would have a beneficial impact on their own organizations. Some financial professionals (22 percent) went so far as to say that anti-business sentiment in Washington, whether perceived or real, had been holding companies back.
Significantly, it is the election results, rather than recent action by the Federal Reserve, that finance pros see being more likely to have a beneficial impact. Survey respondents are skeptical that the Fed’s recent move to resume quantitative easing will have a positive effect in the next 12 months: Only 42 percent see the move as enhancing their organizations' business prospects.
Also on the policy front, survey respondents pointed to uncertainty about future tax policy (20 percent) and uncertainty about the extent of other regulations (33 percent) as contributing to recent business paralysis. Further, financial professionals place blame on a continued aversion to risk in the current environment (39 percent) for why their organizations have delayed investment decisions.
"A combination of risk aversion and uncertainty continue to weigh heavily on financial professionals and on business decision making," said Jim Kaitz, president and CEO of AFP. "As we look ahead, AFP will continue to work with policymakers to ensure that financial regulation is balanced and is aimed at fostering an environment favorable to hiring and capital investment. We are confident that responsible regulation will foster stable and secure financial markets and long-term economic growth."
The survey shows that several other factors have been weighing against companies investing in the future, including weak consumer demand (40 percent), job market weakness (24 percent), swings in commodity prices (12 percent), and foreign exchange volatility (9 percent).
Survey respondents indicate that credit markets have stabilized lately––a trend they expect to continue for the foreseeable future. Among respondents, 42 percent said that their organizations' access to credit has improved over the last six months, and 40 percent said they expect it to continue to improve for the next 12 months. This survey raised the question specifically about access to credit (through debt markets or bank lending), as opposed to access to capital through equity markets.
ABOUT THE SURVEY
On Monday, Nov. 8, AFP surveyed attendees of the 2010 AFP Annual Conference in San Antonio about two major events that could have a major impact on business conditions: the mid-term elections completed five days prior to the conference, and the decision that the U.S. Federal Reserve will resume "quantitative easing." AFP asked for financial professionals' view of the potential impact of each event on their organizations' prospects and on overall business conditions. The survey generated 959 responses from senior finance and treasury executives across a broad range of companies, typically with annual revenues over $500 million. Data tables from the survey results are available by request through firstname.lastname@example.org. For more information, see: www.afponline.org/research.
The Association for Financial Professionals (AFP) serves a network of more than 16,000 members with news, economic research, treasury certification programs, networking events, financial analytical tools, training, and public policy representation to legislators and regulators. AFP is the daily resource for the finance profession. AFP's global reach extends to over 150,000 treasury and financial professionals worldwide, including AFP of Canada; London-based gtnews, an on-line resource for the treasury and finance community; and bobsguide, a financial IT solutions network.