It’s good, it’s bad … thus it’s still unclear

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Optimism and pessimism seem joined at the hip these days where U.S. business sentiment is concerned – and such a mixture of opposing perspectives also seems to be rapidly becoming the “status quo” as well.

For starters, take a glance at a poll conducted by Deloitte Financial Advisory Services LLP of 1,700 professionals from a wide range of industries including financial services; consumer and industrial products; plus technology, media and telecommunications.

Respondents were torn on the topic of U.S. economic recovery in 2013 with nearly as many expecting improvement in 2013 (47.5%) as not expecting it (44.2%).

Indeed, other challenges that the global economy will face in 2013 discerned from Deloitte’s survey include the European debt crisis (27.8%) and China's slowing economy (9.4%). Nearly three-fourths (73.6%) of those polled by Deloitte said the sluggish global economy has already impacted their businesses, with 6.5% expecting more impacts to come.

“As the Eurozone sinks deeper into recession and China's growth slows, we need to remember that their economies—just like many others—are closely tied to America's," noted David Williams (below at right), CEO of Deloitte Financial Advisory Services LLP.

"Whether or not U.S. companies export and have operations overseas, we've already seen that fluctuations in one market can send shockwaves globally that tend to drive dealmakers to the sidelines amidst economic uncertainty,” he stressed.

By contrast, however, a national survey from TD Bank discovered that that both middle-market and corporate CFOs are actually optimistic in terms of both macroeconomic and business growth this year – and at levels unseen since the height of the Great Recession.

Conducted by ORC International, TD Bank’s survey polled a total of 303 executives, half at companies with annual sales of $50 million to less than $500 million (defined by TD as "middle-market") and half at companies with annual sales greater than $500 million (definied as "corporate"  in this survey).

Nearly half (46%) of the CFOs in TD Bank’s polled said they are more optimistic about U.S. economic growth over the next year compared to 2012. Further, 57% of respondents are more optimistic for their own companies' performance over the next year.

Furthermore, most middle-market and corporate financial decision-makers say their companies have accumulated at least a modest stockpile of cash and are optimistic for revenue increases in 2013. In tandem with expectations for increased cash flow and a positive business outlook, almost half (48%) of all executives polled expect their capital expenditures to increase over the next 12 months.

"Business executives have grown more willing to invest, albeit cautiously, over the last year and our survey results support this trend continuing through 2013," noted Greg Braca (at left), head of corporate and specialty banking at TD Bank. "Despite remaining policy and regulatory concerns at the macro level, CFOs seem poised to drive expansion and investment with capital accumulated since the downturn."

The increase in corporate cash reserves noted in TD Bank’s poll turns out to be a much discussed topic of the last few years, Braca added, with 66% of the survey’s respondents stating that they have at least a modest stockpile of corporate cash saved. Of those accumulating reserves, over a quarter (26%) report they are prepared to spend from those funds in 2013.

Adding to the optimism regarding cash availability, over the next year 71% of CFOs expect sales to increase, with only 15% expecting a decrease in sales. While those expecting a drop in sales increased by six percentage points from last year's survey, 13% don't expect a change, Braca said.

Notably, 24% of respondents from companies with revenues over $500 million responded they may likely use cash reserves for expansion via merger and acquisition.

"The climb to a sustained corporate recovery has been a long one, but our survey results and recent work with customers indicate the environment is progressing," added Fred Graziano (at right), TD Bank’s head of regional commercial, government, small business banking, and U.S. Treasury management services.

“The cautious optimism hinted at in last year's survey has begun to take hold within our footprint,” he noted. “We're seeing customers capitalize on the low interest rates through M&A [mergers and acquisitions] and self-investment, positioning themselves for a recovery in the market."

Still, it’s not all peaches and cream for the CFOs polled by TD Bank.

Grazino noted that aside from the U.S. economic climate – about which executives are largely optimistic – respondents are concerned about the government's potentially negative impact on their company finances.

Some 30% of those polled by TD Bank cited political gridlock over the U.S. budget deficit and tax policy, and 24% cited government regulation, as substantial sources of anxiety. While overall uncertainty regarding the global economy remains an issue for 15% of respondents, the sovereign debt crises in Europe are less of a concern, cited by only 3% of those surveyed.

In sum … it’s dang confusing as to how things are going, with some surveys painting a gloomy economic picture for the U.S. while others decorate the outlook with rainbow colors – and that doesn’t help much when it comes to figuring out how freight is going to do, now does it? 

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