Corporate Leaders Upbeat About Business Prospects
Wednesday, March 7th 2007, 12:28 pm
News On 6
WASHINGTON (AP) _ America's chief executives are feeling pretty good about business prospects with most expecting sales to increase, although Wall Street investors have expressed anxiety recently about the economy's direction.
A survey by the Business Roundtable, released Wednesday, also showed that many executives expected capital investment and hiring to remain at current levels or be boosted in the coming months.
These mostly positive projections came from a survey completed before last week's nosedive in financial markets at home and abroad. The market meltdown partly reflected investor worries about the possibility of economic slowdown in two global powerhouses, the United States and China.
The Business Roundtable survey ``shows that CEOs believe the economy is growing at a comfortable pace. The projections for sales, capital spending and employment all point to steady growth with no significant acceleration or slowing over the next six months,'' said the group's chairman Harold McGraw III, president and chief executive officer of The McGraw-Hill Companies.
The stock market selloff _ along with a recent pickup in gas prices and a plunge in orders for big-ticket manufactured goods _ hasn't changed this view, McGraw told reporters in a telephone conference call. ``We continue to see business following a steady-as-she-goes mentality towards the economy,'' he said.
For all of this year, however, the Business Roundtable executives predict the economy will grow by 2.9 percent, which would be the slowest since 2003. Many economists expect similarly slower growth given strains from the housing slump and the struggling automotive sector.
Ex-Federal Reserve Chairman Alan Greenspan recently said it's possible the economy might slip into a recession this year, a factor in last week's plunge in stock prices. Economists said the odds of that happening are low. McGraw agreed, saying the probability of a recession is around 20 or 25 percent.
``Certainly the sentiment and the data from the CEO survey does not suggest any likelihood of a recession,'' McGraw said.
Yet, there is doubt that Greenspan, who left the Fed last year, still has impact.
`` Alan Greenspan is obviously one of the most respected economists, and whenever Alan Greenspan speaks, people listen,'' McGraw said.
In the survey, 73 percent of chief executives said they expected their sales to increase over the next six months. That up from 69 percent from a previous survey in December.
Forty-four percent said they expected to boost capital spending, up from 39 percent in the previous survey. And, 47 percent in Wednesday's survey said they expected such investment to remain at current levels, which was about the same proportion as in the old survey.
On the hiring front, 33 percent said they expected to boost payrolls, down from 37 percent in the previous survey. Forty-five percent said they believe employment will remain at current levels over the next six months, up from 40 percent in the previous survey. However, fewer executives in the new survey compared with the old one thought they would reduce hiring in the months ahead.
The Business Roundtable is an association of CEOs of major corporations, representing a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues. The quarterly survey, conducted Feb. 8 through Feb. 22, was based on the responses of 113 of the group's 160 member companies.