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Business Roundtable Releases Fourth Quarter 2009 CEO Economic Outlook Survey
CEOs see increased capital spending and sales, cite health care as top cost pressure
CEO Economic Outlook
Washington – The CEOs of America’s leading companies anticipate increased capital expenditures and sales in the next six months, but do not expect employment to significantly improve, according to the results of Business Roundtable’s fourth quarter 2009 CEO Economic Outlook Survey. Business Roundtable CEOs also cited health care as their top cost concern going into 2010.
“The economy is in the throes of a long transition back to health; recovery will be long, extending beyond 2010,” said Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications. “The outlook of our CEOs reflects that reality: we see noticeable gains in sales and capital spending, but employment growth continues to lag.”
Business Roundtable is an association of chief executive officers of leading corporations, representing a combined workforce of more than 12 million employees and nearly $6 trillion in annual revenues.
The survey’s key findings from this quarter and last quarter include:
In terms of the overall U.S. economy, member CEOs estimate real GDP will grow by 1.9 percent in 2010.
This quarter’s survey also asked member CEOs to identify their greatest cost pressures. Health care again emerged as the CEOs’ single top cost concern after briefly dipping in the midst of the recession last year. About one-third of CEOs named health care costs as having the greatest impact among a diverse range of pressures that include pension, labor, litigation, energy and materials expenditures.
“Health care is a significant – and growing – concern for our companies,” added Seidenberg. “This underscores the urgent need for the right kind of health care reform that can achieve real and permanent cost reductions. Without reform, these costs will continue to weigh down the economy and hinder job creation when we need it most.”
The Business Roundtable CEO Economic Outlook Survey’s Index expanded to 71.5 in the fourth quarter of 2009, up from 44.9 in the third quarter and 18.5 in the second quarter.
The Index is a composite diffusion index that combines member CEO projections for sales, capital spending and employment in the six months ahead. The Index is centered on 50, and results can range from negative 50 to positive 150. An Index reading of 50 or lower is consistent with overall economic contraction and a reading of 50 or higher is consistent with expansion.
Business Roundtable’s CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economic outlook of Business Roundtable member CEOs.
The survey was completed between November 5 and November 30. The percentages in some categories may not equal 100 due to rounding. Results of all surveys can be found at http://www.businessroundtable.org/ceo_survey.