While the Fed and Wall Street keep pushing the storyline that ultra-low yields, endless credit, and other central bank magic can do more than just pump up (already overinflated) share prices, decimate the economic wellbeing of people who are trying to survive on their savings, and further undermine the structural underpinnings of the financial system, it would appear that those who operate on Main Street's front lines see things differently [italics mine]:
"Economy Still Stuck, CFOs Say" (CFO.com)
In latest Duke/CFO Global Business Outlook Survey, finance chiefs say QE3 will not be the answer to their economic woes.
Although finance chiefs are becoming more pessimistic about the U.S. economy, quantitative easing is not going to perk them up, according to the latest Duke University/CFO magazine Global Business Outlook Survey, now in its 66th consecutive quarter. In the global survey of more than 1,400 finance executives, U.S. CFOs rated their optimism levels at 52 out of 100, down from 56 last quarter. Their European peers are also less optimistic than they were three months ago, while optimism in Asia has improved slightly.
When asked whether a 1% decrease in interest rates would spur them to initiate or expand investment, 91% of responding CFOs said they would not be likely to change their investment plans, even with such a dramatic — and unlikely — rate move.
Eighty-four percent of CFOs would not initiate or expand investment plans even with a 2% rate decrease, indicating that whatever the Federal Reserve announces following its meetings this week, further quantitative easing does not appear to be a solution to the corporate sector’s sluggish spending and the overall tepid recovery. “I think the Fed has pretty much pulled all the levers that it can,” says Greg Bubp, CFO at Eclipse, a manufacturer of industrial heating products based in Rockford, Illinois.
A cynic might wonder why Bernanke & Co. continue on the same path despite these and other reports that suggest they are pushing on a string. Maybe it's because they care more about Wall Street than Main Street?
Michael J. Panzner
