Chief executives of major U.S. corporations say there is little doubt that the American economy has slipped into recession and that the downturn is expected to last at least until the middle of next year.
Chief executives of 100 major U.S. companies say the U.S. economy was heading for recession even before the September 11 attacks. An economy is considered in recession if it grows smaller for two consecutive quarters. Figures are not yet out for the July-September quarter, but they are expected to be negative. The U.S. economy had been in a record ten-year long economic expansion.
William Esrey is the head of the telephone company, Sprint, and chairman of the Business Council. "I think there is concern that the world economy is going the same direction [into recession] at this time. Where a lot of the world before September 11 looked to the U.S. to provide a little bolstering up, September 11 meant that the rest of the world couldn't rely in the short-term on the United States."
For another chief executive, Scott McNealy of computer maker Sun Microsystems, the full impact of the tens of thousands of job cuts announced over the past month have not yet been felt. "I think there is a very small percentage of the layoffs that have been announced that have actually been executed on, if you will," he said. "So there is still a lot of people who don't realize they don't have a job yet. I'm not sure the economy has fully absorbed that."
In a survey released at a meeting in Washington Thursday night, the Business Council said the recession is likely to last from six to 12 months. They expect unemployment to rise a full percentage point to at least 5.5 percent of the labor force.
According to Ralph Larsen, the head of Johnson and Johnson[pharmaceuticals], business is well positioned to endure a downturn, and the government is doing the right things to help. "From a business point of view, we've never been stronger," he said. "We've never been more competitive. The administration and the government are handling things very well. We have a wonderful team in place. So I think there are a lot of reasons to be comfortable with where we're headed and the fundamental strength of this county."
The chief executives favor an economic stimulus package of the kind proposed by the Bush administration. That proposal would quickly inject about $100 billion into the economy to cushion the slowdown.