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The Business Roundtable CEO Economic Outlook Index shows much more caution than optimism.  This reflects expected sales, capital expenditures and employment figures over the next six months.  The survey index fell down to 16.5 in the fourth quarter of 2008 with a consistent decrease in economic activity in all three categories measured.

CEO near-term expectations are falling along with the economy. TheBusiness Roundtable is an association of chiefexecutive officers of leading corporations, representing a combinedworkforce of nearly 10 million employees and $5 trillion in annualrevenues.  This data was compiled from November 2 to November 17.

The individual metrics are startling for projections over the next sixmonths.  It seems that 45% of CEOs are expecting a decrease in sales,while 38% expect an increase.  Some 52% are looking for a decline incap-ex, with only 10% expecting higher cap-ex.  So much for rosy jobsand great labor.  A whopping 60% of CEOs expect a decrease in their company’s employment, with a dismal 9% saying they expect an increase inemployment.  Maybe the good news is that 32% expect no change toemployment. 

These CEOs are also looking for FLAT GDP growth in 2009.  Some 56% ofthe members said that the current challenges have boosted theirborrowing costs.

Below is a small chart showing the magnitude of the drop in expectations:
Outlook     Index
2008-Q4     16.5
2008-Q3     78.8
2008-Q2     74.5
2008-Q1     79.5
2007-Q4     79.5

There is a flip side to this survey, and it may make this even worse than the data shows.  The same CEOs have tended to be far to optimistic in the past, and many have been criticized over not being conservative enough in their outlooks when times are hard.

Jon C. Ogg
December 4, 2008