CEOs optimistic about economy

By Raju Chebium
Gannett News Service

WASHINGTON — There's mixed news for the 8 million Americans looking for work: Four out of 10 leaders of the nation's biggest companies expect to step up hiring in the United States next year, but an equal number do not.

Two out of 10 companies expect to lay off workers, according to the first postelection survey released recently by Business Roundtable, an influential group of CEOs of 150 companies such as AT&T, Citigroup, 3M and General Motors.

The national unemployment rate stood at 5.4 percent in November, according to the Labor Department.

Hank McKinnell, chairman of the Roundtable and head of drug maker Pfizer Inc., said the survey didn't ask the CEOs whether they expect to increase hiring overseas.

He said that would depend on how foreign countries do and acknowledged that China and India — major recipients of "outsourced" work from U.S.-based companies — probably would fare better than the United States.

"The U.S. employment numbers could well be the best in the world with the exception of China and India," he told reporters in a conference call.

The CEOs expect the economy to expand at a higher-than-usual rate of 3.5 percent, the survey showed. It normally grows by 3.1 percent each year, McKinnell said. The survey, conducted Nov. 1-12, also showed:

• 85 percent of the CEOs expect to increase sales next year.

• 50 percent expect to spend more on plants and other long-term "capital" investments in 2005.

In addition to being concerned about surging healthcare and energy costs, the CEOs also worry about the federal deficit, McKinnell said.

The deficit stands at $413 billion, according to the nonpartisan Congressional Budget Office, meaning the United States spends that much more than it takes in and borrows that amount, mostly from overseas investors.

"As we see a return to healthier, sustained economic growth, we should turn our attention to our long-term spending ... and the pressures the deficit would put on our financial markets," McKinnell said. "The deficit is not yet at a point where we are alarmed."

Some economists and lawmakers worry that overseas investors are starting to lose confidence in the United States' ability to repay its debt. The fear: Investors will stop buying treasury bonds and demand their money back, requiring the government to come up with billions of dollars on short notice and causing widespread economic problems.

But McKinnell said he sees no evidence of that happening anytime soon. Foreign investors continue to pump money into the United States, he said.