Wednesday, September 26, 2012

These two articles appear to be very contradictory! Fewer U.S. CEOs planning to expand, hire -- Americans feel more confident in economy

Fewer U.S. CEOs planning to expand, hire

By WASHINGTON — A survey of U.S. chief executives shows a sharp drop in the number of large companies that plan to add jobs or hire more workers.

The Business Roundtable said Wednesday that only 29 percent of its member CEOs plan to increase hiring over the next six months. That’s down from 36 percent in June, when the group last released its quarterly survey. It’s also much lower than the 52 percent of CEOs in early 2011 who said they planned to boost hiring, the highest percentage since the survey began in 2002.

Jim McNerney, chairman of the Roundtable and CEO of The Boeing Co., said CEOs are worried about the impact of budget cuts and tax increases that are set to take effect at the start of next year. The pending U.S. budget changes are known as the “fiscal cliff.” Chief executives are also concerned about economic slowdowns in Europe and China.

The cliff “certainly throws cold water on long-term business planning,” he said in a conference call with reporters.

Only 30 percent of CEOs expect to increase their investment in capital goods such as machinery, computers or other equipment. Companies usually buy such goods when they are expanding. That’s down sharply from 43 percent three months ago.

Large-company CEOs are more pessimistic about their future sales and the overall U.S. economy, the survey found. While 58 percent expect their sales to increase over the next six months, that’s down from 75 percent in the June report. And the CEOs forecast the economy will expand just 1.9 percent this year, below their 2.1 percent forecast three months earlier.

McNerney said that when companies expect growth below 2 percent, “you’re not adding jobs.” Instead, they will simply push their work forces to be more productive, he said.

The Roundtable’s overall CEO Outlook index fell to 66, the lowest since the third quarter of 2009, when the economy was just emerging from recession. Any reading above 50 suggests the economy is expanding.

Still, the negative impact of the fiscal cliff could be offset after the presidential election if Congress postponed the cuts and tax increases and agreed on a longer-term framework for reducing the deficit, McNerney said.

The downbeat view among chief executives is in contrast with a report Tuesday showing that consumers are more optimistic. The Conference Board’s Consumer Confidence Index rose in September to its highest level in seven months. Rising home values and stock prices have boosted Americans’ confidence that the economy will improve in the coming months. More people even expected hiring to pick up.

The Business Roundtable represents the CEOs of the 200 largest U.S. corporations. The survey results are based on 138 responses received between Aug. 30 and Sept. 14.

Copyright © 2012 Paddock Publications, Inc. All rights reserved.
Americans feel more confident in economy

By WASHINGTON — Americans are more confident in the economy than they have been in seven months, an encouraging sign for President Barack Obama with six weeks left in the presidential race.

A new survey of consumer confidence rose Tuesday to its highest level since February on expectations that hiring will soon pick up. And a separate report showed home values rising steadily, signaling sustained improvement in housing.

“This is like an opinion poll on the economy without the political parties attached,” said John Ryding, chief economist at RDQ Economics, a consulting firm. The confidence survey “says people are feeling better. If so, they are less likely to vote for change.”

The Conference Board’s index of consumer confidence shot up in September. The jump surprised many economists because the most recent hiring and retail sales figures have been sluggish.

The increased confidence could help explain recent polls that show Obama with a widening lead over Mitt Romney in some battleground states.

The consumer confidence index is closely watched because consumer spending drives nearly 70 percent of economic activity. The index jumped from 61.3 for August to 70.3 for September. It remains well below 90, the level that is thought to signify a healthy economy.

Among those feeling more optimistic about the economy is Darlene Johnson of Silver Spring, Md., who works for the National Institutes of Health. The value of Johnson’s 401(k) account has risen. Home sales in her neighborhood have ticked up, too, and are commanding higher prices.

“I feel like things are stabilizing,” she said. “I don’t feel as uneasy as I did a few months ago.”

But Johnson, who voted for Obama in 2008, remains undecided on which candidate to back. And she’s still a bit nervous about the future.

“It will depend on how my pockets are looking,” she says. “Everyday circumstances will drive my decision on how I am going to vote.”

Economists point to some key reasons why consumers have grown more confident.

Stocks are up: The Standard & Poor’s 500 stock index has surged nearly 15 percent this year. Gas prices have leveled off after rising for several months. And the broad increase in home prices is likely giving would-be buyers more confidence. When prices rise, buyers don’t worry so much that a home might lose value after they bought it.

National home prices rose 1.2 percent in July compared with a year ago, according to the Standard & Poor’s/Case-Shiller index released Tuesday. That was the second straight month in which year-over-year home prices have increased.

Some economists question whether the higher level of confidence is sustainable. They’ve seen the index spike briefly before since the Great Recession ended more than three years ago. Some say confidence could be affected by negative campaign ads that focus on the economy.

But others note that even a weak economy doesn’t feel so bad to many consumers once it begins to make steady improvement.

“The economy is perceived in relative rather than absolute terms,” noted St. Louis University political scientist and pollster Ken Warren.

Mark Vitner, a senior economist at Wells Fargo, suggests that former President Bill Clinton might have helped boost confidence with his rousing speech on Obama’s behalf at the Democratic National Convention in early September. The Conference Board’s consumer confidence survey was conducted Sept. 1-13.

Clinton “rekindled memories of better economic times” and assured voters that the U.S. economy was on the right track, Vitner said.

The consumer confidence survey polled 500 people. The part of the survey that gauges consumers’ confidence in the economy now and the part that gauges their outlook for the next six months both rose. Consumers were much more optimistic about the short-term outlook for business conditions, employment and their financial situation.

The rising home prices could also help Obama’s prospects. Prices are rising in many large cities in swing states such as Florida, Colorado, Michigan and North Carolina. Prices have risen 3.6 percent in Tampa, Fla., in the past year, for example. And they’re up 5.4 percent in Denver, 6.2 percent in Detroit and 2.2 percent in Charlotte, N.C.

A Washington Post poll out Tuesday showed Obama leading Romney among likely voters in Ohio, 52 to 44 percent. The president also had a slight edge in Florida, 51 to 47 percent among those most likely to vote.

Obama is also gaining the upper hand on which candidate is better able to handle the economy. Registered voters in Ohio preferred Obama on the economy by 50 percent to 43 percent, and in Florida by 49 percent to 45 percent.

Copyright © 2012 Paddock Publications, Inc. All rights reserved.