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AFP Press Release
Survey Finds Wall Street Crisis Bleeds Main Street
Association for Financial Professionals Study Today Indicates Reductions in Capital Spending and Employment
September 26, 2008 – Bethesda, MD - Corporate finance executives reported this morning that short-term credit has tightened materially in the past two weeks, leading their organizations to reduce hiring and capital spending. Further, they report that without a rapid resolution to the crisis, the impact will be even more dramatic. These survey findings were released today by the Association for Financial Professionals (AFP). More than two-thirds of survey respondents are senior finance and treasury executives from broad range of companies with annual revenues over $500 million.
"These results present a stark reality of the impact the credit crisis has on Main Street," said Jim Kaitz, President and CEO of AFP. "Failure to act will have devastating effects on people and businesses throughout the country."
Preliminary analysis of data from the 2008 AFP Short-Term Credit Access Survey shows that nearly 40 percent of finance professionals report that their company’s access to short-term credit has been restricted in the past two weeks. The tightening credit market is having a material impact on how most companies operate as nearly two-thirds of organizations have taken significant actions in recent weeks; including:
- Reducing capital spending
- Moving all or most of their short-term investments to bank deposits and U.S. treasuries
- Shortening the duration of their investment portfolios
- Considering staff reductions or layoffs
- Drawing on credit facilities that are still available to build cash
- Freezing or reducing hiring
Prolonged credit market disruption would cause a greater number of companies to take more severe steps. Nearly three-quarters of finance professionals report that their companies would likely take a number of actions in the next three to six months should credit conditions not stabilize, including:
- Reducing capital spending
- Freezing or reducing hiring
- Drawing on credit facilities that are still available to build cash
- Considering staff reductions or layoffs
- Tightening credit standards for trading partners
- Reducing inventory levels
- Delaying payment to vendors
The findings of the full 2008 AFP Short-Term Credit Access Survey will be released next week.