Top CEOs Pessimistic On U.S. Economy
October 9, 1998
A survey of about 300 top current and former chief executive officers reveals a complete about-face in their reading of the U.S. economy since last May.
According to the Business Council poll compiled in late September:
- Some 95 percent said financial troubles in the world's emerging markets will have an impact on their firms -- with 41 percent apprehensive that the effects will be "significant."
- This compares with 80 percent who predicted in May that the worst effects of the world's financial crisis would soon be over.
- Three-quarters of those in the latest survey felt the slowdown in global growth would last through most or all of 1999.
- Some 64 percent said they plan less hiring, 36 percent said they were reducing capital spending and 38 percent said they "are capitalizing on conditions to purchase foreign assets at attractive prices."
Asked if their pricing power had weakened over the past year, 62 percent replied yes -- with half of them expecting pricing power to worsen in the next six to nine months.
To address these conditions, 80 percent called on the Federal Reserve to ease interest rates, 69 percent advocated international fiscal-rescue programs and 27 percent supported tax cuts.
In a companion survey, 15 corporate economists forecast, on average, a moderation in gross domestic product growth to 2 percent in the second half of this year through 1999. The unemployment rate, they said, would experience an upward drift to 4.9 percent by the end of next year.
Source: John Simons, "Survey of CEOs Yields Dour View of Economy," Wall Street Journal, October 9, 1998.
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