Business Roundtable today released its third quarter CEO Economic Outlook Survey, which showed a drop from strong first- and second-quarter levels in anticipated sales, capital expenditures and employment over the next six months.
BRT Chairman Jim McNerney, Chairman, President and CEO of The Boeing Company, summarized the findings in a briefing with reporters.
The findings of this survey show declines in each category of economic measurement. While we see strong business fundamentals in America still, the quarterly survey results reflect increased uncertainty among CEOs concerning the economic climate and business environment.
A news release and full survey of the 140 BRT-member CEOs are available here, and a transcript of the briefing will be posted Friday.
Afterward, BRT President John Engler spoke via phone with CNBC's Carl Quintanilla and Simon Hobbs. [Video here.] Excerpt:
Quintanilla: Just looking over some of the numbers in the survey, I guess I figured they would be worse, but I did n't figure they would be this worse.
Engler: Well, you know, I thought they would be worse, but I thought this was a little better than I had imagined. The employment numbers were still slightly, while down from the previous quarter, more say increase than decrease -- a ratio of only three-to-two, was five-to-one in the quarter previously. …[The] Roundtable has been doing this survey since 2002 and we create an index number. This is about on average of that whole period of time, but it is down certainly from earlier quarters. We had a record in January, and we've dropped since then. GDP for the year: CEOs are now planning on about a 1.8% annual number. It's reflecting all the uncertainty that's out there, Carl.
Quintanilla: Yeah. Looking at expectations for net sales, over the next six months, 22% down, capital spending down 29. Employment, I guess not down as much, 15. Do you see it bottoming here in Q3? Would you expect Q4 to be better?"
Engler: “Well, I wish I could say that. I think the question is what gets done that clears up some of the things that are hanging over this economy. Do they get things sorted out in Europe? Does the Committee of 12 get an agreement here that we can look at and say, hey, this looks pretty positive? We can avert across-the-board slashing of the defense budget, for example? Do we get the trade agreements finally done after five years? Do we stand in the way of additional overregulation? Do we fend off new taxes? There’s so much in the air.
Reviewing the numbers, CNBC's Hobbs called the survey results "actually a picture of stability," with a majority CEOs, for example, saying sales will increase. Engler responded: "I would agree with that, because it does not do that. It says, there are still some strong fundamentals."
We appreciate the recognition that ultimately the survey still reports a positive number 77.6 (with 50 being the baseline). Media reports naturally highlighted the negatives, which is fair enough, but the full picture needs to be acknowledged.
UPDATE (12:50 p.m.): From our Google news alerts, the headlines tell the, uh, tale?
Consumer Comfort Gauge Drops to Second-Weakest on Record
Economy is showing signs of modest improvement
Topics: Economic Growth.
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