The survey found that 74 percent of CFOs are more optimistic about the economy this quarter than they were the prior quarter -- the highest level of optimism recorded in more than a year. In addition, two-thirds are more optimistic about their own companies' financial prospects this quarter.

The CFO optimism about the economy is reflected in higher expectations about Gross Domestic Product, with average expectation of 2.9 percent over the coming year (median expected increase of 3 percent). This prediction is higher than any GDP prediction during the past three quarters.

"CFOs are out in front of what is happening in the company and play a key role in investment decisions -- capital spending and people," said FEI President and CEO Colleen Sayther. "Hopefully, this cautious optimism is a catalyst for new investment."

Other findings of the survey:

• Eighty-five percent of the surveyed CFOs expect corporate earnings to increase in the coming year, with an average increase of 16.9 percent (median, 10%) over the next 12 months. Revenues are expected to increase for 87 percent of firms.
• Capital spending is expected to increase by 9 percent in the coming year. This is a dramatic increase over last quarter's expected rise of only 1.5 percent.
• While capital spending is still stuck in the "cautious" mode at about half of the companies, 10 percent of the surveyed CFOs say their companies are spending "ambitiously."
• CFOs expect technology spending to increase by 4.9 percent during the next twelve months.
• Advertising spending is expected to increase 3.2 percent; last quarter's prediction was "no growth."
• According to the CFOs, companies are facing a 10.4 percent rise in healthcare costs.
• CFOs this quarter say their companies plan to increase inventory 1.0% over the next year, a dramatic increase when compared to the CFOs' responses for the past five quarters, when they predicted a reduction in inventory, in some cases over 3 percent.

• Forty-two percent of CFOs say that their firms plan to increase employment, while 32 percent say that they plan to hold the number of employees flat.

"Capital spending, more than any other corporate activity, will lift the economy," said John Graham, a finance professor at Duke University and the director of the survey. "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."

The survey also queried CFOs about the impact of overseas outsourcing. In contrast to public reports about some very large companies, shifting jobs to foreign countries has not affected domestic employment among 75 percent of the companies that are hiring at less than normal levels.

"We're sensing from our members that the 'new normal' may well be economic growth with only small gains in employment," said Sayther. "We are in a period when risk management is in and risk taking is out, so it's not surprising that companies are keeping a lid on their total compensation expenses."

Finally, the CFOs say that their companies expect the prices of their products to increase by 1.7% over the next 12 months, an increase over the 0.8% price increase expected last quarter and the small decline in prices expected six months ago.

"For now at least, deflation shouldn't be a concern," noted Dr. Graham.