U.S. corporate executives' confidence in the country's economy has eroded over the past six months, the latest industry survey shows. A growing number of business leaders say current economic conditions have worsened and more layoffs could be expected.
Of the 115 business leaders surveyed during the run-up to the war with Iraq, more than 40 percent said they believe the country's business climate has deteriorated. That's a marked increase from the previous quarter when only 27 percent of the CEOs expressed a pessimistic outlook. The survey is carried out by the Conference Board, a private business research group, every three months. Business executives look at traditional economic indicators such as retail sales and inventories, says Lynn Franco, director of the Board's research center, and those point towards sluggish growth. Ms. Franco says the executives are basing their views on the business outlook from a series of poor economic reports.
"The decline that we've seen in business confidence in the first quarter is primarily driven by weak economic conditions, high energy costs, the build up to the war, threats of terrorism and all these factors contributed to this drop in CEOs' assessment of the current situation," she said.
Ms. Franco says, however, business executives are somewhat more optimistic looking further down the road. She says the survey shows they expect the economy to grow, although not fast enough to generate many new jobs. Nearly half of those surveyed predict a drop in employment levels in their industries, compared to only 29 percent last year. Barely 16 percent say they intend to increase their employment levels compared to 28 percent last year.
"It does look like the hiring picture is going to remain bleak for some time," she said. "Across the board, most industries are not in hiring mode. They're more in kind of keeping things status quo or, if push comes to shove, they're going to lay off in order to make the bottom line."
Ms. Franco says one of the main reason business executives are not rushing to hire new workers is the staggering costs of health care in the United States.