|
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| 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 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. |
Business
Roundtable website
www.businessroundtable.org
2008 Q4 survey
results are not yet available. They should be interesting - reflecting
October 2008 reactions by CEO's to the global credit market problems.
Our own analysis by
Bruce Donnelly follows below
-
biographic
profile |
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|
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. |
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|
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 seem to have
been slipping somewhat in recent quarters - as soon as sales growth
expectations by the CEOs fell in 2006 Q3.
At this point, it remains hard to predict a clear trend
for 2008, but despite growing caution on sales and capital spending, sales
growth and job creation expectations remain strong in mid-2007. |
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|
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. |
|
|
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 Q3 survey was
performed between August 20 and September 5, and therefore 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 doesn't seem to have changed very much.
Expectations for US GDP growth have declined, but the CEOs still seem to
anticipate that their own sales, capital spending, and job growth will
continue largely as before. This may reflect their greater reliance on
growth in foreign markets, and less 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 this election year, and news
media attention to that story, doesn't seem to have shaken their own
business confidence very much. The CEOs still
see 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 is now lower than their expectations at the end
of the last recession in 2003. Some more CEOs are now projecting a
decline in their US employment during the second half of 2008, but most are
still expecting stability or job growth. This is still not comparable
to the pessimism about job growth prospects in 2002 and early 2003, however,
and sales expectations remain relatively strong. For more on what the 2008 US presidential
election
candidates are saying, try our new
research tool for their websites. |
News room /
press releases for the Business Roundtable - where their quarterly
survey reports can be found with their analysis of the data.
Their Q3 2008 CEO Survey analysis was released on September 11, 2008.
The next quarterly survey results should reflect the US election impact
on CEO expectations. By the time of the Q4 2008 survey and Q1 2009 there will have
been time for the CEO's to evaluate the November election outcome and likely
US policy changes 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. |
Our
April
2006 newsletter summarized our trend analysis.
|
|
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. |
|
