Gloom descends on US finance executives

by Joanna Chung and Justin Baer in New York

Published: August 7 2008 19:31 | Last updated: August 7 2008 20:10

US finance chiefs’ outlook for America’s economy sunk to a four-year low amid mounting concern over high oil prices, waning consumer demand and inflation, according to a study.

The findings, which are to be released on Friday, follow a spate of US economic data and corporate earnings reports in recent weeks that fuelled fears of a recession and damped hopes of an easing of the financial crisis.

EDITOR’S CHOICE
In depth: US downturn - Aug-04The Big Freeze: Part 4 - policy response - Aug-06Politics and petrol - Aug-05The Big Freeze, Part 3: Fed under pressure - Aug-06Alan Greenspan: Repel calls to contain competitive markets - Aug-04Clive Crook: Only luck can save America’s economy - Aug-03Optimism among chief financial officers has also faded this year, and in the second quarter touched its lowest point since June 2004, a survey by Financial Executives International and Baruch College’s Zicklin School of Business showed.

At least half of those surveyed believed that the price of crude oil would climb to at least $160 a barrel in six months, or about a third higher than where it traded on Thursday.

Many have taken steps to insulate their companies from the jump in fuel costs, raising prices, cutting corporate travel or investing in more energy-efficient gear. Controlling expenses is among the top challenges for the rest of the year.

“It’s obvious to everyone in the business world that economic conditions in the US continue to slow,” said Scott Davis, chief executive of United Parcel Service, the package-delivery company, which is considered an economic bellwether.

“Economists hold a bleaker outlook for the second half of this year than was the case even three months ago.”

However, the study also showed that more than two-thirds of the 200 CFOs surveyed remained optimistic about their own companies’ prospects. Some even planned to increase technology and capital spending in the next year.

“While economic worries remain, the steadiness in CFOs’ outlook toward their own companies may reveal that they are adapting to the turmoil and taking appropriate actions within their organisations,” said John Elliott, dean of the Zicklin School of Business at Baruch College.

Last month, Jeff Immelt, General Electric’s chairman and chief executive, described the US economy as “sluggish” but added: “The US remains tough, the capital market is still uncertain, but the global markets are robust and we just don’t see a slowdown.”

The US unemployment rate rose last month to its highest level for four years. Recent data, including this week’s Institute for Supply Management’s index of new export orders in the services sector, have also painted a worrying picture of the health of US exports.

[ Home ]

           lick here to enter this with hundreds of postings
 
 [  admin@pushhamburger.com  ]