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CEOs' view of economy improves

A survey shows they expect a controlled slowdown in growth.

December 05, 2007|From Reuters

U.S. chief executives' view of the economy improved in the fourth quarter, although they have become far more concerned about energy prices than they were a year earlier, according to a survey by the Business Roundtable released Tuesday.

The group said that its quarterly CEO Economic Outlook Index rose to 79.5 in the quarter, from 77.4 in the third quarter. It is below the 81.9 reading in the fourth quarter of 2006. Anything above 50 indicates growth.

The reading suggested that, even with the United States two years into a housing slump and with businesses facing a credit crunch and high energy prices, chief executives are expecting a controlled slowdown in growth, a Roundtable official said.

"America's CEOs are expecting the economy to continue in a pattern of softer growth," said Harold McGraw, chief executive of McGraw-Hill Cos., who also chairs the Business Roundtable.

"People keep waiting for shoes to drop and you do have a housing recession and you do want to watch if there could be any spillover effect from that, which we have not really seen," McGraw said. "CEOs are getting a little bit more comfortable that we are slowing down a little bit as an economy, but there aren't huge dark clouds out there. But again, we have to pay attention to the consumer and the consumer behavior patterns."

The cost of healthcare and energy topped chief executives' list of cost worries, with twice as many as a year earlier citing energy as their main worry.

CEOs expect U.S. gross domestic product to rise 2.1% next year. It was their first forecast of GDP for 2008.

Fifty-one percent of respondents did not expect to change their capital spending plans over the next six months, and 45% -- a plurality of respondents -- expected their company's U.S. employment to remain flat.

The survey was conducted from Nov. 5 to Nov. 20.

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