Fiscal cliff worries have helped drive down the economic sentiment of chief financial officers to lows not seen since the depths of the recession, according to a study published on Wednesday by Duke University and CFO Magazine.
More than 70 percent of executives surveyed said they will reduce hiring if no solution is reached and the United States goes over the fiscal cliff. Another two-thirds indicated that they would cut business spending.
Spending has already been on a downturn for the past four quarters, with hiring next quarter projected to be flat.
The cliff is so worrisome that the majority of ordinarily anti-tax CFOs said they would favor a solution to the cliff that includes both spending cuts and tax increases, said Duke Professor John Graham, director of the study.
"I personally think tax increases is the exact wrong thing to do for the economy, but most of us look at this and say, 'What's the alternative?' There has got to be some kind of solution. You can't have this level of dysfunction," said James Streitz, CFO of Tait & Associates, a California-based civil engineering firm, and one of the survey respondents.
The survey's rating of overall CFO optimism has dropped since last quarter. "We haven't gone over the fiscal cliff yet, but concern about it is really weighing on companies in a negative way," said Duke's Graham.