Recession Watch: CEO Survey
News services headline the fact that CEO’s see the economy as slowing. The headline writers vary in how they report this story, but let’s focus on the Reuters coverage.
Getting past the headlines, here is the key paragraph on the findings:
The survey found that 71.4 percent of CEOs expect the U.S.
economy to grow at a rate of 2.1 percent to 3 percent next
year, with 24.3 percent expecting growth of 2 percent or less.
Put another way, most of the CEO’s see a growth rate consistent with the expected and desired slowing of the economy to something a little below the healthy trend. About 25% see a lower growth rate. They do not report specific recession forecasts, but the results are generally more positive than the recent polls of economists on recession chances, a continuing difference between Main Street and Wall Street.
This quotation gets at the essence of the question:
"Two to three percent (GDP) growth is actually not only
quite acceptable but maybe in the long run has a better
probability of being sustained than something else," said
Clayton Jones, chairman, president and chief executive officer
of cockpit electronics maker Rockwell Collins Inc.
It is extremely important for both individual investors and traders to look beyond headlines and consider the actual data. At "A Dash" we always find it important to look at what CEO’s are saying, in surveys and in specific guidance, as well as general observations by market guru’s.