US Businesses Remain Cautious on Spending Despite Optimism

US businesses will be cautious with their spending in 2014. Credit: Business spending image via Shutterstock

Even though U.S. business executives are more optimistic about prospects for the economy as a whole, that doesn't mean they will be on a spending spree in 2014, new research shows.

While three-quarters of U.S. senior finance executives predict economic expansion in 2014, they are among the most cautious in the world when it comes to their spending and investment plans, according to the study from American Express and CFO Research.

Specifically, just 13 percent of U.S. executives plan to increase spending and investment by at least 10 percent this year. That ranks last among the 16 countries examined. Topping the rankings are India, Singapore, Brazil, China and Argentina, where more than 60 percent of finance professionals expect to substantially increase spending and investments.

"The key for these companies, especially those spending more conservatively, will be finding those investments that can offer the most value and impact," said Susan Sobbott, president of global corporate payments for American Express.

There are signs, however, that the U.S. is slowly becoming less conservative on spending and investment. For example, just 36 percent of U.S. finance executives are taking a tightly controlled approach this year, down from 41 percent in 2013.

The study also revealed that regulatory and political concerns, in particular, seem to weigh more heavily on executives in the U.S. than they do on their peers worldwide. More than one-third of those surveyed in the U.S. expect regulatory changes will have a negative impact on economic growth over the next year.

Overall, 72 percent of executives globally predict economic expansion this year, with 17 percent planning to pursue aggressive spending and investment plans, up from just 10 percent last year. The most optimistic country is the U.K.,where 93 percent executives are predicting their economy will grow in 2014.

"After years of economic uncertainty and debt concerns, European companies are finally feeling like they've turned an economic corner, and are joining other regions in predicting economic expansion," Sobbott said.

This year's study shows that while executives feel better poised for economic growth, they remain careful about managing investment and spending – focusing on getting the allocation mix just right, according to Sobbott.

"It's not just about increasing spending and investment now that economic concerns are easing, but about doing so smartly," she writes in the research. "For some organizations, this may mean investing in adding personnel or new technologies, for others it means a continued focus on value creation through efficiency."

The study was based on surveys of 507 senior finance executives from North America, Asia, Australia, Europe and Latin America.