CEOs holding reins tight on spending, hiring
Filed under: Company News, Economy, Verizon
An economic recovery may be underway, but leaders of the nation's largest corporations are standing pat on spending money and hiring. A survey released this week shows that although chief executives expect increased sales in the next six months, they don't see enough demand to translate into greater capital expenditures or more jobs, according to the latest poll of CEOs by the Business Roundtable."Businesses depend on increased demand to drive capital investment and hiring," said Ivan G. Seidenberg, chairman of Business Roundtable, and chairman and CEO of Verizon Communications (VZ). "Right now, we're beginning to see sales trending up, but not to the level that translates into meaningful gains in capital spending or jobs."
The survey, taken earlier this month of roughly 160 of the biggest corporations in the U.S., showed 51 percent of CEOs expected sales to ramp up during the next half year, while 23 percent anticipated no change and 26 percent predicted a decline. But when it came to hiring, only 13 percent of business chiefs expected to increase employment during the next six months. Forty-seven percent expected their payrolls to remain static, and 40 percent anticipated job cuts.
"This quarter's numbers show an economy in transition," Seidenberg said in a statement. "As the Federal Reserve cautioned this month, unemployment is likely to remain stubbornly high as our nation emerges from recession."
When it comes to capital spending, outlays that result in new buildings, equipment and other long-term priorities, just 21 percent of CEOs said they expect to increase such spending, while 44 percent saw no change and 35 percent anticipated decreases.
As with hiring, those results were an improvement from the second quarter, when just 12 percent of CEOs foresaw increased capital spending and 51 percent forecast decreases.
Looking at the U.S. economy as whole, the survey showed corporate leaders estimate that real gross domestic product will fall 0.9 percent this year, an improvement over CEOs' second-quarter estimate of a contraction of 2.1 percent.
The Business Roundtable's quarterly CEO Economic Outlook Index climbed to 44.9 percent in the third quarter, a jump from 18.5 percent in the second quarter, but still below 50 percent, which divides growth and contraction in the economy. The index has shown negative growth for the last year. It hit its low point in the first quarter of this year with a reading of -5.
With jobs still at a premium in the economy, the likelihood of robust economic growth remains in doubt. Consumers drive the majority of economic activity in the U.S., which is directly tied to the numbers of people working and spending money.
Members of the Business Roundtable were surveyed Sept. 2 to Sept. 18. Their companies employ more than 10 million people and collectively generate more than $5 trillion in annual revenue.
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Reader Comments (Page 1 of 1)
9-29-2009 @ 4:14PM
Ted said...
With consumer spending being responsible for about 70% of America's GDP - without jobs, don't expect the poor US consumer to contribute to any positive changes in America's economic recovery. Without jobs, there will not be an emergence from this recession...only the prospects of a deep depression - This should be a "Wake Up Call" to corporate America to act responsibly!
This article doesn't mention the projected pay increases and bonuses expected to be paid to these CEO's - a number in the hundreds of millions (possibly billions) of dollars in undeserved income for jobs poorly done.
The article also doesn't address how many jobs these CEO's are outsourcing to foreign countries in their attempts to boost corporate profits and "exceed Wall Street's expectations" - an awkward phrase that is too often being overutilized by the media to cover up the actual losses of corporate America.
The taxpayers of America have bailed out these failing corporations during this past year with trillions of dollars and now our government doesn't even know how the money has been spent. But... with no job creation in the foreseeable future, I hope these CEO's will not expect a second bailout from the taxpayer - because the IRS can't raise tax money from citizens who have no income to tax. But, then again, The fed can always print more money and sell yet another piece of the US to China.
Someday when the question is raised about which country is the best to live in ...the answer won't be the US - unless action is taken now to reclaim the honor of our country and the rights it once provided to its citizens; rights including the right to work!
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9-29-2009 @ 4:59PM
Oh Mighty Wizard said...
Executive Compensation is tantamount to the "Love that dares not speak its name." As strictly taboo as a discussion of how much money is concentrated in the Executive Suite, despite the pitiful performance of our Managerial Class, is the discussion of the Class Warfare which has been waged against the Middle and Lower Classes for the past 40 years.
The messages of Icons like Sarah Palin and "Joe the Plumber" are symptoms of the substitution of personalities for leaders promulgated by the Capital Class within the national discourse. The dumbing down of the American Educational system and the demonization of the Teachers Unions by the Right Wing (servants of the Capital Class) are tactics contained in the Strategy of institutional theft by the Capital Class of the nation's wealth. Cries of Socialism, and Communism directed toward the Obama Administration are another of these nefarious tactics. We do nothing at our own peril.
Call a spade a spade; it is Class Warfare.
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