Credit Crisis Affecting Main Street Economy, Survey of Finance Execs Finds
The crisis on Wall Street is having a real impact on the economy, including hiring plans, a survey of finance executives finds.
Nearly 40 percent of executives polled by the Association for Financial Professionals said their companies experienced restrictions in their access to short-term credit over the previous two weeks. The survey, which was released Friday, found that the tightening credit market is having a material impact on how most companies operate. Without a rapid resolution to the crisis, the impact will be even more dramatic, the executives reported.
Nearly two-thirds of organizations said they have taken significant actions in recent weeks. Those actions include:
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.
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.
In another sign that the crisis is hitting home, Richard E. Blouse Jr., president and CEO for the Detroit Regional Chamber, issued the following statement regarding Monday's developments in the financial industry and credit markets:
"Over 75 percent of our members say the crisis on Wall Street has spilled over to main street businesses and is undermining growth and jobs. Congress, including the Michigan Congressional delegation, needs to find common ground to pass a rescue plan that restores confidence in the markets, frees up credit and brings long-term stability to the financial sector. This is no time for partisan bickering on either side of the political divide."
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The crisis on Wall Street is having a real impact on the economy, including hiring plans, a survey of finance executives finds.