The Business Roundtable CEO Economic Outlook Index is based on a survey — conducted quarterly since the fourth quarter of 2002 — of our member CEOs’ plans for hiring and capital spending, and their expectations for sales, over the next six months. Taking these factors together, the survey signals the direction of the U.S. economy.
Washington, D.C. – Business Roundtable's second quarter 2007 CEO Economic Outlook Survey shows that leaders of America’s top companies continue to see the U.S. economy in a stable position moving forward with generally favorable business conditions. The CEO Economic Outlook Index, which indicates how CEOs believe the economy will perform in the six months ahead, dipped slightly to 81.9, a three point decrease from 84.9 in the first quarter of 2007.
Business Roundtable is an association of chief executive officers of leading corporations with a combined workforce of more than 10 million employees and $4.5 trillion in annual revenues.
"This quarter's survey shows that CEOs see favorable business conditions continuing," said Harold McGraw III, Chairman of Business Roundtable and Chairman, President and CEO of The McGraw-Hill Companies. "While the survey does suggest that the U.S. economy is settling into a somewhat softer consolidation phase, as long as consumers keep spending, the economy can continue to move ahead."
The survey's key findings for the next six months include:
On overall economic growth, CEOs are now assuming 2.6 percent GDP growth in 2007, a view that is slightly more optimistic than the consensus view of private economists who project a range of 2.0 percent to 2.5 percent.
CEO Economic Outlook Index Demonstrates Economic Stability
The company projections resulted in a CEO Economic Outlook Index of 81.9, a slight decrease from the 84.9 reading in the first quarter of 2007. 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.
This latest index value remains steadily above the 50-70 range observed in late 2002 and early 2003, as the economy recovered from the last recession.
"In the past four quarters, the CEO Economic Outlook Index has been between 81 and 85, a range that is consistent with continued moderate economic growth, but suggests a less robust snapshot than was the case from 2004 through early 2006." concluded McGraw.
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 survey was completed between May 11 and 23 by 100 of the Roundtable’s 160 member companies. The percentages in some categories may not add up to 100 because of rounding.