UPDATE: US CEOs See Business Conditions Worsening -Survey
October 20 2011 - 3:14PM
Dow Jones News
A group of influential U.S. chief executives warned Thursday
that business confidence has slumped to levels last seen in late
2008, with more than half forecasting a slowdown in earnings.
The annual fall survey conducted by The Business Council said
companies are not as "stressed" as three years ago and are keeping
investment and hiring plans relatively intact. Still, most industry
groups and geographies expect the weak economic conditions to
continue into early next year.
"Business conditions have worsened for most Business Council
members in the U.S. and Europe, and the trend toward less favorable
readings in emerging markets continues," said Henry Kravis,
co-founder of private-equity titan KKR & Co. and Business
Council vice chairman, in his introduction to the survey.
The survey findings are more pessimistic than many outlooks
provided by individual companies in the early stages of the
third-quarter reporting season. The poll findings lay much of the
blame on what respondents said was the weakness of lawmakers in the
U.S. and elsewhere.
"The lack of global economic and policy leadership is cited by
almost every member as an important concern for the next several
years," Kravis said.
Nearly all the respondents agreed that U.S. budget deficits
still will be too high even after the August plan to lower the
shortfall is implemented. More than three-quarters of participants
said taxes will have to increase, even with spending cuts.
The Business Council includes more than 100 chief executives
from companies such as J.P. Morgan Chase & Co. (JPM),
Caterpillar Corp. (CAT), Boeing Co. (BA), Exxon Mobil Corp. (XOM)
and Archer Daniels Midland Co. (ADM), who are gathered in Atlanta
for a two-day closed-door meeting.
Its latest poll showed that nearly 60% of CEOs said business
conditions in their own industries are getting worse, up from 10%
in the May survey. A quarter cited tougher conditions in China,
while industrial companies were a little more optimistic than those
in the services sector.
U.S. economic woes remain at the core of respondents' concerns,
with little confidence that gross domestic product can quickly
return to 3%, with three-quarters forecasting expansion of only up
to 2% in 2012.
Inflation expectations also dropped, and less than a third see
the unemployment rate falling below 8% by the end of 2013, though
only a quarter are cutting staff, level with the number in the May
survey.
The outlook for the global economy remains brighter, with 70%
expecting GDP growth above 4% next year.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
--Doug Cameron contributed to this article.
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