Commensurate with it’s name, Financial Aramgeddon finds a musical theme song.
Bad Moon Rising
Courtesy of Michael Panzner at Financial Armageddon.
I see the bad moon a-rising.
I see trouble on the way.
I see earthquakes and lightnin’.
I see bad times today.
— From "Bad Moon Rising,"
by John Fogerty, Creedence Clearwater Revival
Maybe I’m showing my age (and revealing, perhaps, that my brain has a rather odd configuration of neural pathways), but when I read the article that follows in the Baltimore Business Journal, "CEOs Predict Hard Times Ahead," I was reminded of the 1969 hit single by CCR. Although it’s clear that the song has nothing whatsoever to do with economic or financial concerns, it nonetheless conjures up a mood of foreboding that seems appropriate to the topic at hand.
Nearly half of the chief executive officers across the U.S. expect their sales to decline over the next six months, according to a fourth-quarter survey conducted last month by the Business Roundtable.
The Washington, D.C.-based company’s economic outlook index — which measures expected sales, capital expenditures and employment figures for the next six months — shrunk to 16.5 this quarter. In the third quarter it was 78.8, and the fourth quarter of last year, it was 79.5. The index is centered on 50, and results can range from negative 50 to positive 150.
An index of 50 or lower points to an overall economic contraction.
For the next six months, 52 percent expect U.S. capital spending at their companies to decrease and 60 percent predict their U.S. staffing levels will contract during that time.
Business Roundtable has been surveying its membership — CEOs of about 160 of top U.S. companies — on a quarterly basis since 2002.
“As economic conditions continue to soften, so have our member CEOs’ near-term expectations for sales, capital spending and employment,” said Harold McGraw III, chairman of Business Roundtable and chairman, president and chief executive of The McGraw-Hill Cos. “We are committed to working with the new administration and Congress to restore economic growth through bipartisan solutions to the complex challenges facing our workers and businesses.”
In terms of the overall U.S. economy, member CEOs estimate gross domestic product growth for 2009 to be flat.
In regards to cost pressures, CEOs say material costs have the greatest impact over an array of pressures, like labor costs, health care expenditures, energy costs and litigation costs.
For the first time, CEOs listed pension costs as a major concern.
The Business Roundtable’s member CEOs head top corporations that represent a combined workforce of nearly 10 million employees and $5 trillion in annual revenues.
