CFO Confidence Stumbling

The confidence of global finance executives continues to plummet to the lowest levels of the year, suggesting the overall financial and political uncertainty are significantly affecting companies' outlooks and

The confidence of global finance executives continues to plummet to the lowest levels of the year, suggesting the overall financial and political uncertainty are significantly affecting companies' outlooks and growth prospects.

In the most recent CFO survey conducted by Financial Executives International (FEI) and Baruch College's Zicklin School of Business, finance chiefs in the U.S., France and Italy showed diminishing optimism across the board.

Specifically, the CFO Optimism Index fell eight points from the second quarter to the third quarter, reaching its lowest level since the second quarter of 2009. The global economy index for the third quarter also dipped sharply among U.S. and European CFOs, according to the survey.

In the U.S., finance chiefs were just as concerned about their own companies' prospects, with optimism in their businesses falling five points during the quarter, the study found. Similar results were also seen in Europe.

This lack of overall confidence trickled down to CFO projections as well, with finance chiefs in both the U.S. and Europe now anticipating smaller gains in a number of business segments, including capital and technology spending and net earnings.

"Our quarterly survey polls CFOs from three countries that are suffering from the events of the past year," John Elliott, dean of the Zicklin School of Business at Baruch College, said in a release. "The most recent findings reveal their shaken confidence in prospects for a stable economy and strong business growth. CFOs are closing out the year in a worse position than when they began; and are forced to make tough decisions to protect their business and prepare for a tumultuous road ahead. This quarter, there is no clear region on top — U.S. and European CFOs all see an uncertain economic future."

Two of the major issues addressed by finance chiefs in the survey were Standard & Poor's credit downgrade for the U.S. and the Greek debt crisis. In terms of the S&P downgrade, U.S. finance chiefs were split on whether or not the country had become less competitive, while 60 percent of European CFOs said their view of U.S. competitiveness had not changed as a result of the downgrade.

On the Greek crisis, 65 percent of U.S. CFOs predicted an imminent default for the country, while the majority of U.S. and European finance executives were most wary of the affect a Greek default would have on other European countries, according to the survey.

The Wall Street Journal reports the confidence of U.S. CFOs in the government's ability to steer an economic recovery is likely to take even more of a hit with the congressional supercommittee unable to come up with a plan to cut $1.5 trillion from the budget.

Still, S&P and Moody's said recently that they will not downgrade ratings for the U.S. following the failure of the supercommittee, according to The Associated Press. Fitch Ratings, however, did say that the failure was expected to force a revision of the country's rating outlook to negative, the news source reported.

The dwindling confidence among CFOs in the U.S. during the third quarter has been seen in a number of recent surveys. In fact, in a recent Grant Thornton national survey, less than one quarter of respondents said they expected their companies to add to their workforce over the next six months, a 50 percent decrease from six months earlier.