Even the view from the top corner office looks dismal as numerous company CEOs offered a pessimistic outlook for the coming year, predicting flat growth in the gross domestic product (GDP) and declines in sales, capital expenditures and employment.
The survey was compiled by Business Roundtable, an association of chief executive officers of leading corporations comprising nearly a third of the total value of the U.S. stock markets and representing more than 40 percent of all corporate income taxes paid to the federal government.
The organization queried members between Nov. 3 and 17 for their outlook on economic conditions over the first half of 2009.
The responses were used to determine the Business Roundtable CEO Economic Outlook Index, a composite diffusion index that combines responses on projected sales, capital spending and employment to show how member CEOs believe the U.S. economy will perform in the six months ahead. The index is centered on 50, and results can range from negative 50 to positive 150.
Based on its fourth-quarter 2008 survey, the economic outlook index fell to 16.5 from 78.8 in the third quarter. An index reading of 50 or lower indicates an overall economic contraction while a reading of 50 or higher would be consistent with expansion, according to the Business Roundtable.
The CEO respondents identified material costs as having the greatest impact among a diverse range of pressures that include labor costs, health care expenditures, energy costs and litigation costs. In addition, CEOs for the first time ever listed pension costs as a major concern, according to the survey.
About 45 percent of respondents expected their companies' sales to drop in the next six months, while 38 percent anticipated an increase. More than half plan to reduce their capital spending while 39 percent expect no change in expenditures.
Sixty percent of respondents expected their companies to cut their workforce, while 32 percent noted they plan to maintain their employment numbers.