The strong growth in United States' GDP in the third quarter should continue in the coming quarters, predicts John Graham, a finance professor at Duke University's Fuqua School of Business.

Graham bases his forecast on a recent survey of 181 Chief Financial Officers of U.S. companies which indicates that CFOs are increasingly optimistic about the U.S. economy and their own firms over the coming year. They expect the U.S. recovery to become more robust, and they predict increases in corporate revenues, earnings, capital spending, employment and inventory.

According to the September "CFO Outlook Survey," conducted by Financial Executives International (FEI) and the Fuqua School of Business, nearly three out of four CFOs (74 percent) are more optimistic about the economy this quarter than they were the prior quarter and only 8 percent are less optimistic. This is the highest level of optimism recorded in more than a year.

CFOs are also more optimistic about their own companies than they have been since this measurement began in June 2002.

And 85 percent of the surveyed CFOs expect corporate earnings to increase in the coming year, with an average increase of 16.9 percent (median increase of 10 percent) over the next 12 months. Revenues are expected to increase for 87 percent of firms, with an average increase in revenues of 8.1 percent (median increase of 8 percent).

Capital spending, an important economic indicator, is expected to increase by 9 percent in the coming year. This is a bigger increase than CFOs have predicted for the past year and a dramatic increase over last quarter's expected rise of only 1.5 percent.

Surveyed CFOs say technology spending will increase by 4.9 percent during the next 12 months, an improvement over the 2.2 percent expected increase reported last quarter. Advertising spending is expected to increase 3.2 percent; last quarter's prediction was "no growth."

"Capital spending, more than any other corporate activity, will lift the economy," Graham says. "Over the last several quarters, CFOs' optimism has wavered as they predicted only modest gains in spending. We think this quarter's increased optimism, in tandem with increased spending expectations, is a strong sign for continued economic growth."

Dividend increases also should be robust, a consequence of changes in dividend tax rates, Graham says. More than half of public firms represented in the survey expect to increase dividends in the coming year, with the increase averaging about 10 percent.

Graham can be reached for additional comment at (919) 660-7857 or by email.