CEOs Cutting Sales, Cap-Ex, & Employment Expectations

By Douglas A. McIntyre Published Dec 4, 3:02PM EST

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The Business Roundtable CEO Economic Outlook Index shows much more caution than optimism. This reflects expected sales, capital expenditures and employment figures over the next six months. The survey index fell down to 16.5 in the fourth quarter of 2008 with a consistent decrease in economic activity in all three categories measured.

CEO near-term expectations are falling along with the economy. TheBusiness Roundtable is an association of chiefexecutive officers of leading corporations, representing a combinedworkforce of nearly 10 million employees and $5 trillion in annualrevenues. This data was compiled from November 2 to November 17.

The individual metrics are startling for projections over the next sixmonths. It seems that 45% of CEOs are expecting a decrease in sales,while 38% expect an increase. Some 52% are looking for a decline incap-ex, with only 10% expecting higher cap-ex. So much for rosy jobsand great labor. A whopping 60% of CEOs expect a decrease in their company’s employment, with a dismal 9% saying they expect an increase inemployment. Maybe the good news is that 32% expect no change toemployment.

These CEOs are also looking for FLAT GDP growth in 2009. Some 56% ofthe members said that the current challenges have boosted theirborrowing costs.

Below is a small chart showing the magnitude of the drop in expectations:
Outlook    Index
2008-Q4    16.5
2008-Q3    78.8
2008-Q2    74.5
2008-Q1    79.5
2007-Q4    79.5

There is a flip side to this survey, and it may make this even worse than the data shows. The same CEOs have tended to be far to optimistic in the past, and many have been criticized over not being conservative enough in their outlooks when times are hard.

Jon C. Ogg
December 4, 2008

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.