CEOs See Sluggish U.S. Growth This Year Reuters
CEOs See Sluggish U.S. Growth This Year
Wednesday February 19, 7:48 pm ET
By Michael Connor
biz.yahoo.com
BOCA RATON, Fla. (Reuters) - Chief executives at top U.S. companies see America's
economy growing in 2003 at the same anemic pace as last year, with business activity
possibly picking up if global tensions and Iraq war fears ease.
In a survey released on Wednesday
of the Business Council, a group of
blue-chip corporate leaders, the
executives were cautious about
capital spending, which is widely
seen as vital to getting the U.S.
economy on a solid footing.
"The vast majority of CEOs expect
real GDP (gross domestic product)
growth to be roughly similar to last
year's 2.4 percent pace, with 72
percent saying growth will be
moderate in 2003 (1.6 percent to 3
percent)," the council said in a
summary of the survey sent to 180
active and former chief executives.
The CEOs trail the views of economists, who have said the threat of a war in Iraq is
weighing on the economy. According to a survey issued last week by Blue Chip
Economic Indicators, leading economists trimmed projections of 2003 expansion to 2.7
percent from 2.8 percent a month earlier.
The corporate chiefs said a resolution of world tensions over a possible invasion of Iraq
would help U.S. economic growth. Forty percent reported that worries about an Iraqi
war or terrorism had caused a delay or change in business plans for 2003.
Executives on the whole expected mild inflation throughout 2003, interest rates at or
slightly above their current 40-year lows and a continued slide in the value of the U.S.
dollar. Only a small number predicted either recession or a big surge in economic
growth.
The executives, including leaders of Avon Products (NYSE:AVP - News), DuPont
(NYSE:DD - News) and Fannie Mae (NYSE:FNM - News), said government would likely
be the fastest growing part of the economy in 2003, with consumer spending and
housing also expanding, according to the summary released at the Boca Raton Resort
and Club in south Florida.
CEOS CAUTIOUS ON CAPITAL SPENDING
But the executives from the finance, construction, consumer products, technology
retailing and other industries meeting privately at the seaside resort over the next two
days remained cautious about stepping up their own capital spending.
"There is still excess capacity in most industrial segments of the economy. To cure that,
it will take time," said Jeffrey Immelt, chief executive of conglomerate General Electric
(NYSE:GE - News).
Forty-three percent of the executives had no plans to increase investments in plants
and equipment, with the rest nearly equally divided between increasing or slowing such
spending. In a similar survey last October, the vast majority of CEOs had expected
capital spending to stabilize or decline in 2003.
"It's a little slow out there," said Riley Bechtel, chief executive of giant construction firm,
Bechtel Group, at a news conference on the Business Council's survey.
Only 9 percent of the executives expected to step up hiring this year. Forty-six percent
expected no change in hirings, while 45 percent were predicting a lower rate of hiring.
In late 2002, about 40 percent of executives expected hiring to remain stable.
The executives overwhelmingly back the tax-cut proposals by President Bush, saying
an acceleration in tax-rate cuts set for coming years would be the most beneficial. The
executives also applauded the president's proposed elimination of taxes on stock
dividends for investors. |
