In light of the faltering housing market and rising commodity prices, the economic outlook of some of the nation’s most influential business leaders has become a bit more pessimistic.
Even so, their outlook was only slightly more pessimistic than it was earlier in the year according to the Business Roundtable, which surveyed 160 chief executives from a cross section of the county’s largest companies. Results of the quarterly survey, released on Wednesday, reveals their perspective during the second quarter on their companies’ sales, capital expenditures, and employment outlook for the rest of the year.
About 68 percent of executives, a scant 2 percent fewer than in the first quarter, said their sales would be higher. Two percent more, a total of 23 percent said their sales would be equal, and 9 percent said they’d be lower — a minimal change from earlier in the year. The outlook on capital spending also remained virtually unchanged, with about a third in both quarters saying spending would increase and roughly half saying it would stay the same. The executives projected a worsening employment picture, however, with 28 percent predicting an increase in employment, 42 percent predicting stable employment and 31 percent predicting lower employment. During the first quarter 30 percent predicted more hiring, 48 percent saw no change and 22 percent expected a fall in employment.
This led to a decrease in the expected GDP growth for 2008, from 1.5 percent to 1.3 percent, the lowest projection since the survey began at the end of 2002.
“It comes as no surprise that member CEOs have tempered their expectations for economic activity,” said Harold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. Most of the companies that were optimistic had significant business overseas in developing markets, he added. A total of 110 of the 160 executives completed the survey between May 22 and June 9.
In the Washington metro area, however, the picture is a bit brighter. The region’s “job data have showed some strength,” with annual growth of about 28,000 jobs over the past year, said John McClain, senior fellow and deputy director at George Mason University’s Center for Regional Analysis. He predicted aturnaround for the D.C. metro area, including further out jurisdictions, by mid-2009 if the federal government adopts some policies to alleviate the problems.
McClain cautioned, however, that the area, and the nation as a whole, would see “very slow growth if not dipping negative for the next several months as we work through the housing market and foreclosure issues.”
