CHARLOTTE—Chief Financial Officers of major U.S. companies say it is critical for Congress and President Barack Obama to reach a deal on the fiscal cliff.
A new survey from Duke University lays out major economic impacts if politicians can not come to an agreement. The CFO's at America's largest companies say they will cut back on spending if the U.S. goes over the fiscal cliff.
"Going off the cliff is a disaster in terms of employment and capital spending. And so is kicking the can down the road,” said finance professor at Duke University's Fuqua School of Business Campbell Harvey.
Seventy percent of chief financial officers surveyed by Duke said they will reduce hiring if President Obama and Congress can not reach a deal.
"Those are horrible scenarios for the economy," said Harvey.
Senior economist at Wells Fargo Mark Vitner says the uncertainty is a huge drag on economic activity.
"We don't have to get a perfect resolution. We just need something that will tell us what is going to happen with taxes. What's going to happen with government spending,” said Vitner.
Two-thirds of the executives surveyed say they prefer a “grand bargain" in Washington similar to the Bowles-Simpson plan that calls for tax hikes and spending cuts.
"The people that are driving the economy in terms of hiring and capital spending want something that's orderly rather than disorderly," said Harvey.
However Vitner said that kind of deal is not likely.
"I think there's very little chance you'll see a deal of that magnitude done by the end of the year," said Vitner.
Yet even if that kind of deal were to happen, CFOs are not that optimistic about the state of our economy.
"The corporate executives simply don't want to make the decisions about building a new plant, hiring new people, investing in new equipment,” Harvey said. “That's off the table.”
Most of the CFOs surveyed say their companies will not return to pre-recession spending on health care, retirement plans, and training programs.