Business Council Releases Survey Results: U.S. Firms See No Relief From Global Growth Slowdown Through 1999

Business Wire, Oct 8, 1998

WILLIAMSBURG, Va.--(BUSINESS WIRE)--Oct. 8, 1998--The Business Council today released the results of two surveys: 1) A survey of its membership on the current global economy and its outlook; 2) a consensus forecast of 15 technical consultants to the Council. The reports were presented by Douglas A. Warner III, Chairman & CEO, J.P. Morgan & Co. Incorporated and Vice Chairman of the Business Council at a press conference in Williamsburg where the Council's final meeting of the year begins tonight. Presiding at the news conference was Larry Bossidy, Chairman and Chief Executive Officer of AlliedSignal Inc. and Chairman of The Business Council.

The survey of the Council membership shows that members believe the U.S. economy is slowing. Every member surveyed felt that global growth slowdown was not temporary. Three quarters of respondents thought it would last through most or all of next year, and the remaining quarter felt it would continue for several years.

Ninety-five percent believe that the deteriorating global economic and financial environment will have an impact on their firms, with many (41%) characterizing the impact as significant. Members indicated actions they were taking to offset the impact included less hiring (64%) and reducing capital spending (36%). Some 38% said they were capitalizing on the conditions to purchase foreign assets at attractive prices.

Council members indicated that some government response to the conditions would be appropriate. Eighty percent called for the Fed to ease interest rates; 69% were in favor of international financial rescue programs; and a minority (27%) advocated tax cuts.

The survey represents the views of 75 members who responded to questionnaires.

The technical consultants predict slower growth in the second half of the year with real GDP growth of 2%. They expect slower growth to be accompanied by a rise in unemployment from 4.5% last quarter to 4.9% by the end of next year. They predict that despite the slower growth, inflation will head higher from an annualized rate of 1.9% last quarter to 2.7% by the fourth quarter of next year.

Founded more than a half century ago, The Business Council is a group of current or former chief executive officers from a broad range of large American corporations representing all major industries and regions. The voluntary association of nearly 300 leaders meet three times per year for the free exchange of ideas both among themselves and with representatives of the government.