American CEOs expect further economic deterioration: survey

As recession takes its toll on the US economy, many CEOs of America's leading companies anticipate a decrease in expected sales, capital expenditures and employment figures and expect the US economy to go from bad to worse in the next six months.

A quarterly survey of chief executives conducted by the Business Roundtable, an association of CEOs of leading corporations, representing a combined workforce of nearly 10 million employees and more than $5 trillion in annual revenues, said that said 67 per cent of CEOs expect their company sales to decrease and 9 per cent expect no change.

When asked about the company's US capital spending to change in the next six months, 66 per cent said that there will be a decrease while 25 per cent expected no change.

As far as employment goes, the CEOs painted a gloomy picture by saying employment will decrease by 71 per cent in the next six months, which will further add to the 5.1 million jobs lost since the recession began in December 2007, the worst in the postwar era and experts predict the unemployment rate to reach 10 per cent by the end of the year, from the current 8.5 per cent.

There was some glimmer of hope for the US economy as orders for US-made factory goods increased 1.8 per cent in February - for the first time in seven months. (See: US factory orders rise for the first time in seven months) Stepped up efforts by the Obama administration and Federal Reserve to ease the credit crunch will take time to have an impact and restore market confidence. 

''Improving consumer confidence and demand, both in the US and abroad, is the key to jump-starting the economy,'' said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies.

''Fortunately, both the US and foreign governments have recognised this need and taken significant steps to spark demand. And while recently implemented administration policies will take time to have an impact, they already have begun to restore confidence in our markets, which is a critical first step,'' he added.

World leaders, meeting in London for the G20 Summit last week, had agreed on an additional economic recovery package of $1.1 trillion to be made available to the world economy through the International Monetary Fund (IMF) and other institutions, and imposing new regulations for financial institutions to pull the world out of recession. (See: Global markets rally as G-20 pledges $1.1 trillion recovery package)

Obama said that ''the patient had stabilised and was in good care'', claiming that, by any measure, the London summit was historic.

''It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response,'' he said.

Completing the survey between 16 March and 27 March, the report said that ''In terms of the overall US economy, CEOs estimate real GDP will decline by 1.9 per cent in 2009, down from their zero per cent estimate in the fourth quarter of 2008.''

''Despite the considerable challenges facing our country, by working together, we can turn our economy around, put Americans back to work and preserve our position as the world's economic leader,'' added McGraw. ''We stand ready to work with President Obama and Congress to ensure sustained, long-term economic growth for our workers, communities and companies.''