Suggesting that the U.S. economic slowdown is not confined to manufacturing, the broader-based CEO Economic Outlook Index compiled by the Business Roundtable is at its lowest level since March 2004. The index now stands at 94.3, the same as in March 2004 and down from 104.4 in the first quarter of this year.
"America's CEOs expect to see continued solid growth for the remainder of the year, though 2005 will undoubtedly witness a deceleration from the fervent pace of 2004," said Henry McKinnell, chairman and CEO of Pfizer Inc. and chairman of the Business Roundtable, as the Washington, D.C.-based association of corporate chief executive officers released its index numbers on May 31.
While a majority of 123 CEOs surveyed expect sales by their companies to continue to increase this year and employment to remain at least at current levels, they are moderating their capital spending plans. Slightly less than half -- 49% -- anticipate increasing spending during the next six months and 47% expect it to remain the same.
The CEOs anticipate inflation-adjusted GDP growth for the U.S. to be 3.4% this year, generally in line with most other economic forecasts and the long-term potential growth rate of the U.S. economy.