U.S. Corporate Finance Professionals Optimistic About 2005 Economy

Weakening Dollar and Expanding Federal Deficit Seen As Likely Threats to Growth

December 14, 2004 — Bethesda, MD – Spurred by increasing consumer demand and an expanding workforce, U.S. corporate finance professionals expect the U.S. economy will grow at a moderate rate during 2005, according to a new survey released by the Association for Financial Professionals (AFP). Further, the treasury and financial professionals indicate that their companies expect to gain greater access to credit and plan to increase business investment in 2005, but the weakening U.S. dollar and expanding federal deficits are seen as the most likely threats to further economic growth.

Eighty-four percent (84%) of treasury and financial professionals expect the U.S. economy will grow at a moderate pace (between 2 and 4.9%) over the next 12 months. Fifteen percent (15%) of respondents expect the economy to grow more slowly (less than 2%) while less than 1% of financial professionals expect the U.S. economy to contract in 2005.

"The results of our survey show that U.S. corporations are planning and implementing their business strategies for 2005 based largely on a positive financial outlook," said Jim Kaitz, president and CEO of the Association for Financial Professionals. "AFP members' expectations about the near-term economic outlook and the marketplace in which their company operates impact the critical decisions they make about the amount of corporate borrowing and business investments. Working in a wide range of industries and in public or private organizations of varying sizes, the respondents provide an excellent indicator of future business investments. The fact that the treasury and finance professionals we surveyed are mostly optimistic about 2005 business conditions is positive news for the U.S. economy as a whole."

Overall, 54% of financial professionals expect business conditions to improve over the next 12 months. Thirty-seven percent (37%) of survey respondents believe business conditions in the upcoming year will remain similar to those in 2004, while 8% believe business conditions will worsen in the coming year.

While generally confident of the future, survey respondents identify several factors that they expect will increasingly affect the overall business environment in 2005:

• The weak U.S. dollar (77%)
• Consumer demand (68%)
• Federal deficit spending (58%)
• Business investment (52%)

Confidence expressed by the financial professionals surveyed is reflected by the increased amount of credit made available to their companies over the past six months. Forty percent of respondents indicate their company now has greater access to short-term and/or long-term credit than it had six months ago. Further, nearly a third of respondents (30%) expect their company’s credit access will improve in the coming year.

The survey also asked financial professional for their views on other key economic indicators:

• 56% of respondents believe that consumer demand will pick up in 2005;
• 37% report that their company will increase their overall workforce in 2005, while 40% of respondents expect their company to maintain their current workforce;
• 40% expect their company to decrease the amount of outstanding long-term or short-term debt in 2005;
• 68% expect to maintain current levels of inventories during the same period; and
• 68% expect business investment to expand in the next 12 months.

"While the U.S. economy appears to be facing challenges in the coming year, financial professionals expect their companies to be investing for the future," said Kevin Roth, Director of Research at the Association for Financial Professionals.

The AFP Business Outlook for 2005 Survey was conducted November 30th and December 10th, 421 financial professionals responded to the survey. Full survey results are available at www.AFPonline.org/outlook.

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The Association for Financial Professionals, headquartered in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, career development, certifications, research, representation to legislators and regulators, and the development of industry standards. Sponsored by the Association for Financial Professionals, the CTP designation is the globally recognized industry standard for treasury and a requirement for a changing profession. More than 16,000 professionals have earned AFP’s certification since 1986. For more information about AFP, visit www.AFPonline.org.