ShortListNews.com

OnTheShortList.com

    SurgeUSA.org

Business Roundtable CEO Survey - Our Analysis 2002-2009

Global Direct Investment Solutions

Google Custom Search

Home Up About Us Add News Advertise Market Reach Links Search Contact Us

Up
Search: Americas
Search Global CRE
Executive Summary
Research
Search Cityscape
PR: Americas
Search: Europe
Editorial
Search: Asia
Events

The Business Roundtable has published a quarterly CEO Survey of their members since 2002 which may be useful as a market insight for professionals who assist such executives with major capital investment project plans.

For example, commercial real estate (CRE) developers, investors, and brokers as well as economic development specialists may find the charts below to be helpful indicators of trends in corporate performance expectations among top US executives.

Our graphics below make it easy to visualize trends in their survey results over recent years - for capital spending, job creation, and sales revenue as well as US GDP growth expectations.  The Business Roundtable CEO Survey press releases for recent quarters are repeated below for convenient reference and comparison of their analysis relative to our own opinions over time, starting from summer 2007 when we first observed changes in the investment market through our own work.

The September 2009 survey results as graphed below (taken Sept 12-19) reflect growing optimism about sales finally picking up from the already much lower recession levels, but not to the degree necessary to spark significant job creation or capital spending.

Although there seems to be some fledgling optimism emerging about sales picking up again during the next six months, there obviously isn't yet the high level of confidence in increased sales as shown by CEO's during the 2003 - 2004 recovery.  Job creation expectations remain comparable to the period in 2002 as the 2001 recession continued, but capital spending expectations remain even more pessimistic than at that time..

Business Roundtable website

www.businessroundtable.org

 

2009 Q1 survey results reflect reactions by CEO's to the recession as well as the new Obama government responses.  Q2 doesn't look much better.

 

2009 Q3 Survey results and Business Roundtable transcript

 

Our own analysis by Bruce Donnelly follows below

- biographic profile

These CEOs obviously didn't see it coming ... even well after a recession had apparently started.

They also don't see any end in sight to this recession.  Job creation and capital spending plans remain at very low levels - and growth expectations are now based upon the lower levels of a severe recession rather than prior years.

The December 2008 survey Q4 results show a dramatic reversal of CEO expectations, as discussed in a Business Roundtable press conference when they were released, and in their press release comments and comparisons.  At the time of the Q3 results in September 2008, the CEO outlook had hardly changed significantly during all of 2007 and 2008.  By December 2008, economists finally declared that a recession had officially started in December 2007.

The April 2009 survey results for the first quarter show far worse expectations for the next six months than in December.  Note that expectations are now far worse than at the end of the last recession when this CEO Survey process was started.  The June 2009 results show that this pessimistic outlook remains largely the same - except for some hope that sales will start to recover.

The December 2008 survey results seem to suggest that CEO sentiment among their members is not a very reliable leading economic indicator.

Ditto for leading economists.  Their optimism also lagged the last economic recovery, as shown by the graphics below.

Analysis: survey caveats

This research does not capture data about the level of capital investment spending by the companies - just whether they expect to do more or less of it over the next six months.

It is therefore a CEO sentiment indicator which can be expected to mirror their sales expectations to some degree, as per the chart below.

It may not be a reliable market predictor because the 100 or so companies in this survey are not a representative sample of all types and sizes of U.S. and foreign companies which are growing at this time in the USA.

It also does not distinguish between specific types of capital spending, so it may not be indicative of intentions to invest in new offices, factories, equipment and new technology.

Does jobs growth lag sales and capital spending plans?

Within the context of the above caveats, this CEO Survey is still potentially interesting to professionals in this niche who assist top executives with their capital investment project plans in new or existing locations.

While sales expectations climbed very rapidly at the end of 2003, expectations for job creation seem to have grown more slowly at first but have then stayed relatively strong.

By contrast, capital spending expectations slipped slowly but remained fairly strong in 2007 and 2008 after sales growth expectations started falling in 2006 Q3.  Then they dropped sharply in 2008 Q4.

At this point, it remains hard to predict a clear trend for 2009.  Sales decline fears seem to have stabilized, but at lower levels.  Job creation and capital spending seem to be on hold.

Do sales lead project plans?

Without attempting to prove the intuitively obvious point that current sales performance as well as economic growth and company sales expectations by CEOs influence their capital investment project decisions, including project timing, these charts would seem to confirm such a pattern at a glance.

As sales expectations rapidly improved at the end of the recession in 2003 Q4, the expectations for capital spending also rose very rapidly until they peaked in 2005 Q1.

There has been a continued expectation of capital spending growth since that time, but as concerns about the risks of declining sales seem to have grown recently, the capital spending expectations have also slipped somewhat.

Note: 2008 Q4 data was 0.00% expected GDP growth.

US Economy Assumptions

The Business Roundtable CEO Survey has, since the start of 2003, asked the basic question "What number are you using for estimated annual U.S. GDP growth for this year?"

Unfortunately, there is no similar question related to global economic growth perceptions.  Since many large US companies now rely very heavily on the strength of global markets for a large percentage of their expected growth, this would be interesting.

From a US perspective, the chart at left shows how the perceptions by their members have changed in recent years.

Unlike consensus data about expectations by economists, this survey reflects what CEOs at top companies expect.

That presumably shapes their future plans for US capital investment projects.  A glance at the chart at left, relative to the charts about about capital investment plans and job creation expectations at their companies seems to show a pretty strong correlation.

As one would expect, plans for expansion seem to scale back as general economic growth expectations decline, and grow as their expectations about the economy improve.

Our analysis of the Business Roundtable CEO Survey and press releases follow below  

Their September 2007 analysis suggested a recent shift in CEO perceptions from a "stable economy" to "some softening of economic conditions in the coming months".  The 2007 Q3 survey preceded a major interest rate policy change by the Federal Reserve Board during September 2007.  This move quickly reversed a weak US stock market during Q3, so it was interesting to see that Q4 CEO perceptions also went up a bit by late November in preparation for their 2008 growth plans.  Our own trend analysis is shared below, on the right.

From December 2007 through June 2008, despite a major drop in the US stock market from the October 2007 high, the CEO outlook didn't seem to change very much.  Expectations for US GDP growth declined, but the CEOs still seemed to anticipate that their own sales, capital spending, and job growth would continue largely as before.  This may have reflected their greater reliance on growth in foreign markets, and less perceived direct impact from the US residential housing market problems and the related financial market problems.  The doom and gloom crisis talk of US politicians in an election year, and news media attention to that story, didn't seem to shake their own business confidence very much.

The CEOs still foresaw fairly strong sales growth, capital spending, and job creation for their companies in 2008, despite some pessimism about a decline in overall US GDP growth to 1.4%, which was below their expectations at the end of the last recession in 2003.  Some more CEOs were projecting a decline in their US employment during the second half of 2008, but most were still expecting stability or job growth.  This was still not comparable to the widespread pessimism about job growth prospects in 2002 and early 2003, however, and sales expectations remained relatively strong.

From October 2008, as in the stock market and federal "bailout" or "stimulus" initiatives to deal with various perceived economic crises in the USA and worldwide which went far beyond the initial concerns about the US housing market or financial institutions, the CEO expectations for their own companies obviously fell off a cliff as the charts show.  The talk in news media about the risk of a recession changed to dire predictions of a US or global depression.

The question remains whether these CEO expectations will prove to be more reliable at recognizing the light at the end of the tunnel before it arrives - to foresee the end of the recession - than they were at recognizing this economic wall before they hit it.  In 2003 Q4, their optimism returned fairly quickly, but still seems to have lagged the general economy.

As of June 2009, the fact that only 34% of their CEOs expect higher sales over the next six months, and very few (6%) expect to hire more people in the next 6 months or increase capital spending (12%) above the severe recession level of recent months suggests that these leaders don't see the "glimmers of hope" which Obama supporters keep talking about.

News room / press releases for the Business Roundtable - where their quarterly survey reports can be found with their analysis of the data.

Their Q4 2008 CEO Survey analysis was released on December 5, 2008.

The next quarterly survey results should reflect the US election impact and various federal "bailout" or stimulus initiatives on CEO expectations.

By the time of the Q1 2009 survey results in March, there will have been time for the CEO's to evaluate the likely US policy changes of the new Obama administration and Democratic Congress toward business during 2009 - 2012 to the extent that this affects their own business growth plans and economic assumptions.

The growth trends in visits to our websites since our launch in 2004 seem to reflect similar patterns.  We had timed our launch to coincide with the start of the market recovery that we perceived among our contacts in this niche early in 2003 after deferring the launch of this referral business since fall 2001 when it was set up through our initial R&D work.

Our analysis of the distribution of major capital investment projects in the USA from 1994 - 2006 may also be of interest.  We can also suggest some other sources on request for more recent market data, but it is not all published openly.

Our April 2006 newsletter summarized our project trend analysis.  An updated analysis is planned for April 2009 to reflect 2008 results.
The following press release was issued by the Business Roundtable on June 23, 2009. Our own commentary
Refer to the original Business Roundtable CEO Survey results for Q2 2009 in their press release of June 23, 2009.

"This quarter’s results reflect a continuing weak set of economic conditions," said Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications. "Conditions – while still negative – appear to have begun to stabilize."

Note their June 26 statement on the new "cap and trade" tax bill, HR 2454, "The American Clean Energy and Security Act of 2009".  This preceded last minute revisions to the bill which made it even worse before it was passed later on June 26.

Note that the baseline meaning of higher, equal, or lower has shifted in the new context of recent surveys.  Expectations for sales, capital spending, and job creation should be viewed in this context of a lower level.
The following press release was issued by the Business Roundtable on April 16, 2009. Our own commentary
Refer to the original Business Roundtable CEO Survey results for Q1 2009 in their press release as well as their news media conference call transcript in which Terry McGraw of The McGraw-Hill Companies, chairman of the Business Roundtable, discusses the CEO Survey results with reporters.  This survey was taken between March 16 and March 27.  He expressed the personal view that there had been some more positive economic indicators in recent weeks, after the survey was taken.  He made some optimistic and supportive comments about the economic stimulus plan and recent G-20 summit, as well as some signs of credit market activity, while avoiding saying anything critical about other recent initiatives by Obama and Congress. Although the conference call suggested that this was perhaps the "darkest hour", it reflected little of substance to suggest improvement soon.  No real "glimmer of hope" here.
The following press release was issued by the Business Roundtable on December 4, 2008. Our own commentary
Refer to the original Business Roundtable CEO Survey results for Q4 2008 in their press release and data comparisons and press conference transcript. See our 2008 Q4 Survey comments above.
The following press release was issued by the Business Roundtable on September 11 2008. Our own commentary
Release Date: 9.11.08

Contact: Kirk Monroe (202) 496-3269   or Joe Crea (202) 496-3288

BUSINESS ROUNDTABLE RELEASES THIRD QUARTER 2008 CEO ECONOMIC OUTLOOK SURVEY

CEOs expecting modest growth, increased capital expenditures despite strong cross currents

Washington, D.C. - The Business Roundtable CEO Economic Outlook Index - which reflects expected sales, capital expenditures and employment figures for the next six months - increased slightly to 78.8 in the third quarter of 2008, up from 74.5 in the second quarter, according to results released today.

According to the survey, the capital expenditure outlooks of CEOs of leading U.S. companies have risen noticeably since last quarter, while their expectations for sales and employment remain roughly unchanged.

"Our member CEOs' increased expectations for capital spending suggest that investment plans are likely to remain on track for the second half of 2008, despite the lingering housing recession and continued concerns about the nation's financial sector," said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. "Despite surprisingly strong GDP growth in the second quarter and continued strong exports, our CEOs realize there are still challenges for the economy going forward."

Business Roundtable is an association of chief executive officers of leading corporations, representing a combined workforce of nearly 10 million employees and $4.5 trillion in annual revenues.

The survey's key findings for the next six months include:

Increase No Change Decrease
1. How do you expect your company's sales to change in the next six months? 67% 25% 7%
2. How do you expect your company's U.S. capital spending to change in the next six months? 39% 52% 10%
3. How do you expect your company's U.S. employment to change in the next six months? 29% 39% 32%

CEO Economic Outlook Index for Third Quarter

On overall U.S. economic growth, member CEOs estimate that GDP growth for 2008 will be 1.4 percent, up from the 1.3 percent GDP growth assumed last quarter.

Exports continue to benefit the U.S. economy and many of the companies participating in the survey. In the second quarter of 2008, exports increased at a 13.2 percent annual pace, about twice the average growth in the 2005 - 2007 period.

"It is important to remember that roughly half of Business Roundtable companies' revenue comes from outside the United States," added McGraw. "As a result, our CEOs' expectations are influenced by both domestic and international conditions. For this reason, our member CEOs remain focused on such issues as healthcare, education, energy and free trade that are so critical to maintaining America's competitiveness in the international economy."

The Business Roundtable CEO Economic Outlook Survey is a composite diffusion index, which combines responses on projected sales, capital spending and employment to show how member CEOs believe the U.S. economy will perform in the six months ahead. While there has not been a formal U.S. recession since the survey was launched in late 2002, we believe that an index reading of 50 or lower would be consistent with an overall economic contraction and that a reading of 50 or higher would be consistent with expansion.

Survey Date    CEO Economic Outlook Index
2008 Q3         78.8
2008 Q2         74.5
2008 Q1         79.5
2007 Q4         79.5
2007 Q3         77.4

Business Roundtable's CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Business Roundtable member CEOs.

The survey was completed between August 11th and August 28th by Business Roundtable member CEOs. The percentages in some categories may not equal 100 due to rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey 

# # #

Business Roundtable ( www.businessroundtable.org ) is an association of chief executive officers of leading U.S. companies with $4.5 trillion in annual revenues and nearly 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid to the federal government. Collectively, they returned $114 billion in dividends to shareholders and the economy in 2006.

As noted in recent quarterly survey results (below), there still seems to be a disconnect between the doom and gloom media reporting and politically motivated commentary about the US economy and what the CEOs of these major companies are saying about their own sales and job growth and capital investment plans.

In fact, although the stock market has continued to tumble because of bank problems and other concerns, the outlook by these CEOs remains visibly much better (see charts) than at the end of the last recession.

They obviously remain skeptical about the US economic growth rate for this year, but have never expected it to turn negative.  They have just anticipated slower growth than in recent years.

Although the GDP estimate has only risen slightly, it seems quite plausible that their expectations for 2009 will be significantly better since they obviously never bought into the idea that 2008 was the sort of economic disaster which the media has portrayed.

There has been wild speculation in the media about 2008 being a severe "recession" or even another "Great Depression", without any hard evidence to justify such hype as more than self-serving political scare tactics and campaign rhetoric.

As the Business Roundtable commentary has finally acknowledged this quarter, these CEOs have more of a global outlook rather than a purely US focus.  There are certainly some warning signs about slower growth and rising risks in some global markets, so the outlook for 2009 is not likely to improve rapidly.

On the other hand, CEO sentiment this quarter has actually improved a bit.  Recent turmoil in the financial services sector and residential real estate market does not seem to have shaken their confidence.

Are all these CEOs delusional?  Probably not.  It is more likely that journalists and populist politicians who thrive on sensational bad news are out of touch with economic reality.

The following press release was issued by the Business Roundtable on June 18, 2008. Our own commentary

Release Date: 6.18.08

Contact: Kirk Monroe  (202) 496-3269 or Joe Crea   (202) 496-3288

BUSINESS ROUNDTABLE RELEASES SECOND QUARTER 2008 CEO ECONOMIC OUTLOOK SURVEY

Despite weakening labor market, CEOs' investment plans and sales expectations hold steady Index dips five points amid ongoing housing declines, high energy price

Washington, D.C. - The Business Roundtable CEO Economic Outlook Index - which reflects sales, capital expenditures and employment figures for the next six months - declined to 74.5 in the second quarter of 2008, down from 79.5 in the first quarter, according to results released today.

Most leaders of America's top companies still expect sales and capital expenditures to either increase or remain unchanged over the next six months, but more now anticipate a drop in future employment, according to the survey.

"This quarter's results reflect the broad cross currents at work in the U.S. economy," said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. "Our CEOs clearly have tempered their overall expectations against a backdrop of continued housing declines and mounting energy prices. That said, CEOs remain cautiously optimistic about their sales and spending projections."

Business Roundtable is an association of chief executive officers of leading corporations, representing a combined workforce of nearly 10 million employees and $4.5 trillion in annual revenues.

The survey's key findings for the next six months include:

Increase No Change Decrease
1. How do you expect your company's sales to change in the next six months?

        68% Increase  

        23% No Change

          9% Decrease


2. How do you expect your company's U.S. capital spending to change in the next six months? 

 

        33% Increase  

        52% No Change

       15%  Decrease


3. How do you expect your company's U.S. employment to change in the next six months?
 

       28% Increase  

       42% No Change

       31% Decrease


CEO Economic Outlook Index for Second Quarter

On overall U.S. economic growth, member CEOs estimate that GDP growth will be 1.3 percent; down from the 1.5 percent GDP growth assumed last quarter.

The CEO Economic Outlook Index combines the responses on projected sales, capital spending and employment into an overall index, which shows how member CEOs believe the U.S. economy will perform in the six months ahead. This is a diffusion index centered on 50, meaning anything above 50 is expansion and anything below 50 is contraction.

CEO ECONOMIC OUTLOOK INDEX

Survey Date   CEO Economic Outlook Index
2008 Q2        74.5
2008 Q1       79.5
2007 Q4       79.5
2007 Q3       77.4
2007 Q2       81.9
2006 Q4       81.9

The Roundtable's CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Roundtable member CEOs.

The survey was completed between May 22 and June 9 by 110 of the Roundtable's 160 member CEOs. The percentages in some categories may not add up to 100 due to rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey 

There still seems to be a disconnect between the CEO assumptions that their own corporate sales and investment plans will remain relatively unchanged, while their US employment is now expected to decline even though the CEO assumptions about US GDP have only declined a little bit.

This may reflect the fact that these are largely global companies, and their international sales may still be perceived as strong despite expectations of fewer US jobs.

So far, however, the survey doesn't seem to reflect the general business media and political pessimism about an actual US recession.  Instead, there seems to be caution about risks of slower growth and more job cuts in the USA, but still relative confidence in sales and investment plans.

Given the extraordinary surge in oil prices during this period, as well as financial market problems which may affect the availability and cost of capital and the levels of both business and consumer spending, the main surprise in the latest data is that it remains relatively unchanged.  The endless media coverage of residential real estate problems and home foreclosures, and the related decline in residential construction and some types of consumer spending, does not seem to have shaken the CEO expectations for 2008.

Some more CEOs expect job declines now, but not a drop in sales which might trigger less investment than planned

The following press release was issued by the Business Roundtable on April 10, 2008. Our own commentary
Release Date: 4.10.08

Contact:   Kirk Monroe     (202) 496-3269

BUSINESS ROUNDTABLE RELEASES FIRST QUARTER 2008 CEO ECONOMIC OUTLOOK SURVEY

International markets provide cushion to U.S. economic downturn for many U.S. companies


Washington, D.C. – The leaders of America’s top companies see flat expectations for sales, capital expenditures and employment over the next six months, with strong demand from overseas markets providing some relief from the U.S. downturn, according to Business Roundtable’s first quarter 2008 CEO Economic Outlook Survey, released today.

The Business Roundtable CEO Economic Outlook Index — which reflects sales, capital expenditures, and employment figures for the next six months — was unchanged in the first quarter of 2008, remaining at 79.5, the same level as the fourth quarter of 2007. Business Roundtable is an association of chief executive officers of leading corporations, representing a combined workforce of nearly 10 million employees and $4.5 trillion in annual revenues.

“Despite the current downturn in the U.S., this quarter’s results suggest that member CEOs have a steady outlook for their businesses over the next six months, with expectations for sales, capital expenditures and employment all remaining virtually unchanged,” said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. “The CEOs surveyed preside over our country’s largest companies, all of which are actively engaged in the international economy. Today, more than ever, these companies’ outlooks are bolstered by the strong demand for U.S. goods and services from around the world. Additionally, the Fed’s recent actions to inject more liquidity into the system are expected to have a positive impact in the months ahead.”

The survey’s key findings for the next six months include:

Increase No Change Decrease
1. How do you expect your company's sales to change in the next six months?

        70% Increase  

        21% No Change

         9% Decrease
2. How do you expect your company's U.S. capital spending to change in the next six months?

        35% Increase  

        50% No Change

       15%  Decrease
3. How do you expect your company's U.S. employment to change in the next six months?

       30% Increase  

       48% No Change

       22% Decrease

CEO Economic Outlook Index for First Quarter

On overall U.S. economic growth, member CEOs estimate that GDP growth will be 1.5 percent; down from the 2.1 percent GDP growth assumed last quarter.

The CEO Economic Outlook Index combines the responses on projected sales, capital spending and employment into an overall index, which shows how the CEOs believe the U.S. economy will perform in the six months ahead. This is a diffusion index centered on 50, meaning anything above 50 is expansion and anything below 50 is contraction.

CEO ECONOMIC OUTLOOK INDEX

Survey Date CEO Economic Outlook Index
2008 Q1      79.5
2007 Q4      79.5
2007 Q3      77.4
2007 Q2      81.9
2007 Q1      84.9
2006 Q4      81.9

The Roundtable’s CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Roundtable member CEOs.

The survey was completed between March 10th and March 27th by 100 of the Roundtable’s 160 member CEOs. The percentages in some categories may not add up to 100 due to rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey .

# # #

Business Roundtable ( www.businessroundtable.org ) is an association of chief executive officers of leading U.S. companies with $4.5 trillion in annual revenues and nearly 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid to the federal government. Collectively, they returned $114 billion in dividends to shareholders and the economy in 2006.

Contrary to all the economic doom and gloom commentary by politicians and news media in recent months, and the real problems in the US financial markets. major banks, hedge funds, brokerage firms, and the residential housing industry related to subprime mortgage loans and foreclosure rates, the CEOs seem to remain very confident of the continued expansion of their companies.

In short, there seems to have been very little change in their outlook in the last quarter, other than to reduce their estimates of US GDP growth while still expecting their own sales, capital spending, and job creation to continue as before.

This apparent disconnect between their own company performance expectations and US GDP growth predictions may reflect their heavy reliance on global markets, where a weak dollar has contributed to gains on earnings translated back from foreign operations.

 

The following press release was issued by the Business Roundtable on December, 2007. Our own commentary

Release Date: 12.4.07

Contact:    Kirk Monroe       (202) 496-3269

                Joe Crea            (202) 496-3288

Business Roundtable Releases Fourth Quarter 2007 CEO Economic Outlook Survey

New CEO Survey Forecasts Steady Economic Conditions in the Next Six Months; U.S. Chief Executives Cite Energy and Health Care as Greatest Cost Pressures They Face

Washington, DC - Despite a relatively uncertain economic cycle, the leaders of America's top companies showed a slight uptick in their expectations for the economy over the next six months, according to Business Roundtable's fourth quarter 2007 CEO Economic Outlook Survey, released today.

The CEO Economic Outlook Index, which indicates how CEOs believe the economy will perform in the six months ahead, improved moderately, rising more than two points from last quarter's 77.4 to 79.5 today.

"This quarter's survey suggests that CEOs, as a whole, still see the economy as steady and that the vast majority expect their sales, capital spending and employment levels to either increase or remain steady in the first half of 2008," said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. "These latest results demonstrate tempered CEO confidence with a slight rebounding of expectations since last quarter."

In response to the annual question on cost pressures facing their businesses, a majority of CEOs cited energy and health care expenditures, equally, as their greatest fiscal pressures.

Business Roundtable, an association of chief executive officers of leading corporations, represents a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues.

The survey's key findings for the next six months include:

 

The survey's key findings for the next six months include:

1. How do you expect your company's sales to change in the next six months?
70%  Increase
17%  No Change
13%  Decrease

2. How do you expect your company's U.S. capital spending to change in the next six months?
35%  Increase
51%  No Change
14%  Decrease

3. How do you expect your company's U.S. employment to change in the next six months
33%  Increase
45%  No Change
22%  Decrease

Note: Totals may not equal 100 due to rounding.

Health Care and Energy Are Now Top Cost Pressures

This year's survey marked the first in which health care and energy were equally identified as the top cost pressures for CEOs with 32 percent of respondents identifying health care and 32 percent identifying energy. The concern over energy costs has doubled from last year, when 16 percent of CEOs cited energy expenditures as the top cost.

"For the last four consecutive years, health care costs, which impact virtually all Roundtable companies, have been cited as the top pressure. But now, with oil approaching $100 a barrel, energy costs have risen to the top concern in CEOs' minds," noted McGraw.

Following energy and health care, other CEO cost pressures in this year's survey were material costs (17 percent), litigation costs (10 percent), labor costs (5 percent), and capital costs (1 percent).

CEO Economic Outlook Index for Fourth Quarter

On overall economic growth, the CEOs offered their first estimate of GDP growth in 2008, and on average they are assuming GDP growth of 2.1 percent in their business plans.

The CEO Economic Outlook Index combines the responses on projected sales, capital spending and employment into an overall index that shows how the CEOs believe the U.S. economy will perform in the six months ahead. It is a diffusion index centered on 50, which means anything above 50 is expansion and anything below 50 is contraction.

CEO ECONOMIC OUTLOOK INDEX

2007 Q4       79.5
2007 Q3       77.4
2007 Q2       81.9
2007 Q1       84.9
2006 Q4       81.9
2006 Q3       82.4

"While this quarter's index represents only a slight expansion, it confirms the CEOs' belief in the underlying strength of the economy, which has endured increased energy costs and credit concerns," concluded McGraw.

The Roundtable's CEO Economic Outlook Survey, which has been conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Roundtable companies.

The survey was completed between November 5th and November 20th by 105 of the Roundtable's 160 member companies. The percentages in some categories may not add up to 100 due to rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey .

The correlation between the Business Roundtable research and our website visit activity has been interesting recently.

Our visits are down very slightly from 2006 levels after dropping sharply when the subprime mortgage finance crisis started to attract more attention, and raised concerns about the potential effect on the economy.

As soon as Treasury and the Federal Reserve started to respond to this crisis, the visit activity seemed to rebound - as did the financial markets.

It is therefore interesting to see the slight uptick in the level of CEO confidence in this latest Business Roundtable survey for the fourth quarter of 2007.

In short, despite all the doom and gloom news media reports, the CEOs still seem to be fairly confident of continued growth in their own sales levels.

Their capital spending intentions also seem to have stayed strong, along with their job creation expectations.

Their overall economic growth assumptions - at 2.4% GDP growth for 2008 - are down from the 3.5% pace of the 2003 to 2006 recovery, but have not really changed much in 2007.

This is not, in short, a doom and gloom scenario of a likely recession in 2008.  Instead, it seems to reflect continued cautious optimism at a time when corporate performance in general has been pretty good.

Of course, the caveat is that this research doesn't go back very far - such as to show whether the CEOs are actually pretty savvy about seeing a recession coming at an early stage. 

On the other hand, they see their own order books - and clearly their sales are not telling them that the sky is falling.

It's just a very competitive but still growing economy in which they are finding opportunities to make money, whether in the US or elsewhere in the world.

As noted in the economic outlook index, it's actually quite impressive that in the context of nearly $100 per barrel oil prices that the outlook is still so rosy.  These costs are obviously a major and growing concern, but are not perceived as a disaster, just as the subprime mortgage financial mess seems to be of growing concern but not a cause for recession or panic.

In short, after having had a few months to digest these latest changes, the CEOs don't seem to be very worried about them.  They still see very strong sales.

The following press release was issued by the Business Roundtable on September 17, 2007. Our own commentary
Release Date: 9.17.07

Contact: Kirk Monroe      (202) 496-3269
             Joe Crea           (202) 496-3288

Business Roundtable Releases Third Quarter 2007 CEO Economic Outlook Survey

U.S. Chief Executives Anticipate Some Softening of Economic Conditions in the Coming Months

Washington, DC - Leaders of America's top companies expect some softening of U.S. economic conditions in the next six months, according to Business Roundtable's third quarter 2007 CEO Economic Outlook Survey, released today.

The CEO Economic Outlook Index, which indicates how CEOs believe the economy will perform in the six months ahead, declined moderately to 77.4, a four and a half point dip from 81.9 in the second quarter of 2007.

"This quarter's survey shows that CEOs see a modest decline in economic conditions in the coming months," said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. "While the latest results continue a pattern of gradual decline in expectations since the beginning of the year, America's business leaders remain confident in the overall business environment."

When asked if recent credit market turmoil would impact business prospects, 60 percent of CEOs said they do not expect substantial effects; while nearly 40 percent reported that they do. Of the 40 percent of CEOs who do expect effects, roughly 62 percent believe that the main channel of impact will be through a weaker overall U.S. economy. Twenty-nine percent worry that it will cause their customers to retrench; five percent worry that it will increase their cost of capital and five percent worry that it will negatively affect the global economy.

Business Roundtable, an association of chief executive officers of leading corporations, represents a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues.

The survey's key findings for the next six months include:

1. How do you expect your company's sales to change in the next six months?
68% Increase
20% No Change
12% Decrease

2. How do you expect your company's U.S. capital spending to change in the next six months?
35% Increase
50% No Change
15% Decrease

3. How do you expect your company's U.S. employment to change in the next six months
33% Increase
41% No Change
26% Decrease

Note: Totals may not equal 100 due to rounding.

CEO Economic Outlook Index for Third Quarter

On overall economic growth, CEOs are now assuming 2.4 percent GDP growth in 2007, a view that is slightly less than the previous survey, which assumed 2.6 percent GDP growth.

The CEO Economic Outlook Index combines the responses on projected sales, capital spending and employment into an overall index that shows how the CEOs believe the U.S. economy will perform in the six months ahead. It is a diffusion index centered on 50, which means anything above 50 is expansion and anything below 50 is contraction.

CEO ECONOMIC OUTLOOK INDEX

Survey Date    CEO Economic Outlook Index

2007 Q3         77.4
2007 Q2         81.9
2007 Q1         84.9
2006 Q4         81.9
2006 Q3         82.4

"While this third quarter index result of 77.4 represents a modest downtick from the close index range of 81 to 85 from the past four quarters, it remains steadily above the 50-68 range observed in late 2002 and early 2003, as the economy recovered from the last recession," concluded McGraw.

The Roundtable's CEO Economic Outlook Survey, which has been conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Roundtable companies.

The survey was completed between August 20 and September 5 by 113 of the Roundtable's 159 member companies. The percentages in some categories may not add up to 100 due to rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey.

There was a fairly interesting correlation between the drop in CEO expectations during 2007 Q3 and the level of daily visit activity to our websites, which are designed to support capital investment project planning.

Assumptions about US GDP growth declined in Q3 to early 2003 levels.  That was when we had perceived a growing level of project interests among our contacts after a prolonged period of slower US investment project activity since 2000 related to the collapse of the 1990's "dot bomb" bubble and other factors.

The Q3 results suggest that CEOs are still sticking to their somewhat lower expectations for sales, but are taking into account the risks of lower US market growth (GDP) and are scaling back their own US job growth expectations (at their own companies - not their general market perceptions).

Meanwhile, however, their capital investment plans held steady at the Q2 2007 level, which suggests they may be taking a "wait and see" attitude toward the lower general market perceptions.  They may be waiting to see whether that lower growth expectation is confirmed or not by their own sales performance before actually changing their capital investment plans.

Our own daily visit analysis reflected a parallel drop in activity from a peak in May and June 2007.  There was nearly a 20% decline in visit activity - which has not been seen in recent years.

Our peak came in mid-June, and then the decline stopped and our visit activity started to increase again almost exactly on the date when the Federal Reserve announced a major interest rate cut and other measures to bolster the US economy and deal with some of the financial market problems.

Coincidence?  It is too early to be sure of it, but this suggests that the caution shown among the surveyed CEOs in 2007 Q3 caused some project plans to be temporarily shelved during the summer while waiting to see whether expectations of lower growth were confirmed.

For now, our visit activity is still well below the peak levels of May and June, but increasing.

The following press release was issued by the Business Roundtable on June 7, 2007. www.businessroundtable.org
Release Date: 6.5.07 

Contact: Johanna Schneider   (202) 872-1260

             Jennifer Handt          (202) 468-9256

Business Roundtable Releases Second Quarter 2007 CEO Economic Outlook Survey

New Survey of U.S. CEOs Shows Stable Economy

Washington, DC – Business Roundtable's second quarter 2007 CEO Economic Outlook Survey shows that leaders of America’s top companies continue to see the U.S. economy in a stable position moving forward with generally favorable business conditions. The CEO Economic Outlook Index, which indicates how CEOs believe the economy will perform in the six months ahead, dipped slightly to 81.9, a three point decrease from 84.9 in the first quarter of 2007.

Business Roundtable is an association of chief executive officers of leading corporations with a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues.

"This quarter's survey shows that CEOs see favorable business conditions continuing," said Harold McGraw III, Chairman of Business Roundtable and Chairman, President and CEO of The McGraw-Hill Companies. "While the survey does suggest that the U.S. economy is settling into a somewhat softer consolidation phase, as long as consumers keep spending, the economy can continue to move ahead."

The survey's key findings for the next six months include:

Increase
No Change
Decrease

1. How do you expect your company's sales to change in the next six months?
66% Increase
26% No Change
7%   Decrease

2. How do you expect your company's U.S. capital spending to change in the next six months?
34%  Increase
53%  No Change
14%  Decrease

3. How do you expect your company's U.S. employment to change in the next six months
42%  Increase
33%  No Change
25%  Decrease

Note: Totals may not equal 100 due to rounding.

On overall economic growth, CEOs are now assuming 2.6 percent GDP growth in 2007, a view that is slightly more optimistic than the consensus view of private economists who project a range of 2.0 percent to 2.5 percent.

CEO Economic Outlook Index Demonstrates Economic Stability

The company projections resulted in a CEO Economic Outlook Index of 81.9, a slight decrease from the 84.9 reading in the first quarter of 2007. The CEO Economic Outlook Index combines the responses on projected sales, capital spending and employment into an overall index that shows how the CEOs believe the U.S. economy will perform in the six months ahead. It is a diffusion index centered on 50, which means anything above 50 is expansion and anything below 50 is contraction.

CEO ECONOMIC OUTLOOK INDEX

Survey Date   CEO Economic Outlook Index

2007 Q2          81.9
2007 Q1          84.9
2006 Q4          81.9
2006 Q3          82.4
2006 Q2          98.6
2006 Q1        102.2
2005 Q4        101.4
2005 Q3          95.9
2005 Q2          94.3
2005 Q1        104.4

This latest index value remains steadily above the 50-70 range observed in late 2002 and early 2003, as the economy recovered from the last recession.

"In the past four quarters, the CEO Economic Outlook Index has been between 81 and 85, a range that is consistent with continued moderate economic growth, but suggests a less robust snapshot than was the case from 2004 through early 2006." concluded McGraw.

The Roundtable's CEO Economic Outlook Survey, which has been conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic assumptions and outlooks of Roundtable companies.

The survey was completed between May 11 and 23 by 100 of the Roundtable’s 160 member companies. The percentages in some categories may not add up to 100 because of rounding. Results of all surveys can be found at www.businessroundtable.org/ceosurvey .

Business Roundtable is an association of chief executive officers of leading U.S. companies with $4.5 trillion in annual revenues and more than 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid. Collectively, they returned $112 billion in dividends to shareholders and the economy in 2005.

Roundtable companies give more than $7 billion a year in combined charitable contributions, representing nearly 60 percent of total corporate giving. They are technology innovation leaders, with $90 billion in annual research and development spending - nearly half of the total private R&D spending in the U.S.

 

Send mail to webmaster@shortlistnews.com with questions or comments about this web site.
Copyright © 2007, 2008, 2009, 2010, 2011 Global Direct Investment Solutions, Inc.
P.O. Box 439, Fox River Grove, IL 60021  TEL 847-304-4655
Last modified: 12/20/10