Business Council: Econ Outlook Seen As Flat, Inflationary
13 February 2009 - 6:30AM
Dow Jones News
Most U.S. companies are holding prices steady and see the
outlook as flat or inflationary, according to an influential survey
of chief executives released Thursday.
The semiannual survey by The Business Council also showed 40% of
senior executives see the domestic recession lasting into 2010,
though 60% see a recovery by the fourth quarter.
Business conditions have deteriorated in all regions since its
last survey was released in October, said the council, based in
Washington D.C., an invitation-only grouping of more than 100 CEOs
presently chaired by Jim Owens, chairman and CEO of Caterpillar
Inc. (CAT).
"Our members have lost faith in many of the institutions that we
need to deal with on a daily basis," said Jamie Dimon, vice
chairman of the council and chairman and CEO of JPMorgan Chase
& Co. (JPM).
Dimon, in his introduction to the latest survey, also noted "a
perception gap between how we, as business leaders, view our own
performance during this crisis and how the public sees us."
"It is important that we work to restore trust in our
organizations, our institutions, and ourselves," said Dimon.
The majority of members expect to hold pricing steady despite
the depressed demand environment "and expect that the future
pricing environment will either remain as it has been or become
more inflationary".
Only 7% see more deflation, with 45% forecasting "more inflation
than in the past".
All 71 respondents to the survey, which closed Jan. 21, said
business conditions had worsened in Asia since the last poll taken
ahead of the bankruptcy of Lehman Brothers.
More than 90% said conditions had deteriorated in every other
region, and half viewed the outlook as negative for their own
industry.
The council's index of U.S. business confidence fell to 25.9 in
the latest survey compared with 32.1 in October. Readings below 50
indicate negative expectations.
More than half the CEOs polled see the U.S. economy contracting
by 2% to 4% this year, and 40% expect the recession to continue
into 2010. Three quarters see more downside in the domestic housing
market.
With most members expecting profits to decline year-on-year in
2009, the focus on cost cutting will see 58% lay off workers, and
45% reducing inventories.
Almost a third of respondents said they were looking for merger
and acquisition opportunities.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com