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Won’t Get Fooled Again

Dec 14, 2015

Jim Kaitz, President and Chief Executive Officer, AFP

When it comes to economic predictions, who do you rely on?

Do you listen to economists looking at the big picture, or the real-world practitioners down in the trenches?

More often than not, I side with the practitioners.

Today marks the release of the 2016 AFP Business Outlook Survey. In it, the Association for Financial Professionals’ research team surveyed nearly 1,200 treasury and finance professionals for their thoughts on the economy. Their predictions differ from those made by economists.

Most economists predict the U.S. economy will grow at least 2 percent in 2016. But the respondents to the 2016 AFP Business Outlook Survey see it differently:

  • 73 percent of treasury and finance professionals expect the U.S. economy will grow 1.9 percent or less.
  • Only 20 percent predict the U.S. GDP will increase 2 percent or more.
  • In fact, 6 percent actually believe the American economy will contract in 2016.

Why the cautious outlook? Context has a lot to do with it. Treasury and finance professionals are focused on their own business and may not have time to survey the global economy like economists do. Economists, on the other hand, are tasked with looking at the bigger picture.

So what message do I take from the 2016 Business Outlook Survey? Based on their responses, I believe it signals AFP members have a cautious outlook about the 2016 economy. They’re asking: What’s the rationale for such optimism? What, exactly, will arrive in 2016 that will cause the economy to gather steam?

While AFP members know their organizations are operating on sound financial footing, there don’t appear to be any obvious signals now that would give them a reason to predict a faster-growing economy in 2016—no big expansion plans, no strong customer demand. They thought big growth would come this year; more than one-third forecasted growth above 4 percent in AFP’s 2015 Business Outlook. That obviously was not the case.

Perhaps treasury and finance professionals were overly optimistic last year. But the 2016 AFP Business Outlook Survey clearly shows they won’t make that mistake again.

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