U.S. CEOs: Katrina Will Cut Capital Outlays

In the wake of Hurricane Katrina, which struck the Gulf Coast of the U.S. on August 29, CEOs of major U.S. corporations have cut back on their capital spending plans for the next six months. A survey released September 21 by the Washington, D.C.-based Business Roundtable shows a 14% decline from pre-Katrina levels in the number of chief executives expecting to increase capital spending. "Decreased capital spending is a cause for concern because these investments have been a significant driver of long-term economic growth," says Henry McKinnell, Pfizer Inc.'s CEO and the current chairman of the Business Roundtable.

Its latest survey, conducted during the week of September 12, also shows 9% fewer CEOs anticipating higher sales during the next six months and a 2% decline in the number expecting new hiring. A majority of the CEOs -- 61% -- expect the impact of Hurricane Katrina on their businesses will be moderately negative, 21% anticipated no effect and 4% expect the impact to be strongly negative. Higher energy prices will be the primary source of any negative impact, the CEOs said.