Business Roundtable Releases December CEO Economic Outlook Survey New CEO Survey Shows Economic Strength Moving into 2006;

Health Care, Energy Costs Posing Greatest Pressures



    WASHINGTON, Dec. 14 /PRNewswire/ -- Business Roundtable's December 2005
 CEO Economic Outlook Survey shows that America's leading CEOs see broad
 strength in the economy moving into 2006, despite a recent series of economic
 challenges. As a result, the CEO Economic Outlook Index has rebounded from its
 post-Hurricane Katrina level of 88.2 in September to reach 101.4, a high
 second only to the reading of 104.4 in the first quarter of 2005.
     In the annual question about challenges to growth, for the third
 consecutive year CEOs cited health care costs as the greatest cost pressure,
 while energy costs have supplanted litigation costs as the number-two concern.
     Business Roundtable is an association of chief executive officers of
 leading corporations with a combined workforce of more than 10 million
 employees and $4 trillion in annual revenues.
     "Going into 2006, America's CEOs believe that the economy will remain
 resilient despite the challenges of several unanticipated events," said Hank
 McKinnell, chairman of Business Roundtable and chairman and CEO of Pfizer Inc.
 "The confidence of U.S. business leaders has rebounded even in the wake of
 devastating natural disasters, persistently high oil prices and a continuing
 volatile geopolitical environment worldwide."
     The survey's key findings for the first half of 2006 include:
 
 
                                         Increase    No Change    Decrease
     1.  How do you expect your
         company's sales to change         87%           9%          5%
         in the next six months?
 
     2.  How do you expect your
         company's U.S. capital
         spending to change in the         56%          40%          5%
         next six months?
 
 
     3.  How do you expect your
         company's U.S. employment
         to change in the next             40%          41%          19%
         six months?
 
 
     On overall economic growth, CEOs are assuming a figure of 3.3 percent GDP
 as they draw up their business plans for 2006. By comparison, GDP growth is
 expected to be 3.4 to 3.5 percent in 2005, above the average 3.1 percent
 growth rate of the past 35 years.
     "In each of the three areas of this survey -- sales, capital spending and
 employment -- more companies still anticipate expansion rather than
 contraction," continued McKinnell. "Capital expenditure plans continue to
 reflect steady gains, and employment predictions by the nation's leading
 companies are near their all-time high."
 
     Rising Health Care Costs Remain Greatest Cost Pressure
     Energy Costs Rise Above Litigation to Number Two
 
     For the third year in a row, CEOs cited health care costs (42 percent) as
 Corporate America's number one pressure across the economic spectrum. Energy
 costs (27 percent), cited as the third greatest pressure in 2004, have
 supplanted litigation costs as the number two area of cost pressure for large
 U.S. companies. Litigation costs dropped to 9 percent from 20 percent in 2004;
 materials and pension costs tied at 8 percent each as a cost pressure for
 companies, while labor was listed by 4 percent. (Greatest Cost Pressure  chart
 can be viewed at
 http://www.businessroundtable.org/newsroom/document.aspx?qs=58E6BF807822B0F1AD
 0448122FB51711FCF50C8)
 
     "Clearly, soaring health care costs remain the most serious concern of
 America's business leaders," said McKinnell. "These costs harm our nation's
 economic health and our ability to compete. In 2006, Business Roundtable CEOs
 will continue to work to reduce these costs while also improving health care
 quality and access.
     "And while passage of class action legislation this year appears to be
 relieving litigation cost pressures, CEOs are increasingly alarmed at the
 negative effects of rising energy costs on America's businesses, consumers and
 economy," McKinnell continued. "We will continue to watch these costs in the
 coming year while advocating for energy policies that ensure diverse supply,
 expand development of technology, and promote conservation and efficiency."
 
     CEO Economic Outlook Index Rebounds from Post-Katrina Level
 
     The CEOs' economic projections resulted in a CEO Economic Outlook Index
 reading of 101.4, a strong upward shift from the depressed index reading of
 88.2 in September following Hurricane Katrina. This new December reading is
 near the survey's record-high index of 104.4 in the first quarter of 2005.
     The CEO Economic Outlook Index combines the responses on projected sales,
 capital spending and employment into an overall index that shows how the CEOs
 believe the U.S. economy will perform in the six months ahead.  It is a
 diffusion index centered on 50, which means anything above 50 is expansion and
 anything below 50 is contraction.
 
                           CEO ECONOMIC OUTLOOK INDEX
 
                           Survey         CEO Economic
                            Date          Outlook Index
 
                          December 2005        101.4
 
                          September 2005
                          (Post-Katrina)        88.2
 
                          September 2005
                          (Pre-Katrina)         95.9
 
                          May 2005              94.3
 
                          March 2005           104.4
 
 
     The Roundtable's CEO Economic Outlook Survey, which has been conducted
 quarterly since the fourth quarter of 2002, provides a forward-looking view of
 the economic assumptions and outlooks of Roundtable companies.
     The December survey was completed by 117 of the Roundtable's 160 member
 companies.  The percentages in some categories may not add up to 100 because
 of rounding.  Results of all surveys can be found at
 http://www.businessroundtable.org.
 
     Business Roundtable is an association of chief executive officers of
 leading corporations with a combined workforce of more than 10 million
 employees and $4 trillion in annual revenues.  The chief executives are
 committed to advocating public policies that foster vigorous economic growth
 and a dynamic global economy.
 
 

SOURCE Business Roundtable

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