CEOs see increased capital spending and sales, cite health care as top cost pressure.

The CEOs of America’s leading companies anticipate increased capital expenditures and sales in the next six months, but do not expect employment to significantly improve, according to the results of Business Roundtable’s fourth quarter 2009 CEO Economic Outlook Survey. Business Roundtable CEOs also cited health care as their top cost concern going into 2010.

“The economy is in the throes of a long transition back to health; recovery will be long, extending beyond 2010,” said Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications. “The outlook of our CEOs reflects that reality: we see noticeable gains in sales and capital spending, but employment growth continues to lag.”

Business Roundtable is an association of chief executive officers of leading corporations, representing a combined workforce of more than 12 million employees and nearly $6 trillion in annual revenues.

Cost Pressures

This quarter’s survey also asked member CEOs to identify their greatest cost pressures. Health care again emerged as the CEOs’ single top cost concern after briefly dipping in the midst of the recession last year. About one-third of CEOs named health care costs as having the greatest impact among a diverse range of pressures that include pension, labor, litigation, energy and materials expenditures.
“Health care is a significant – and growing – concern for our companies,” added Seidenberg. “This underscores the urgent need for the right kind of health care reform that can achieve real and permanent cost reductions. Without reform, these costs will continue to weigh down the economy and hinder job creation when we need it most.”

Outlook Index
The Business Roundtab
le CEO Economic Outlook Survey’s Index expanded to 71.5 in the fourth quarter of 2009, up from 44.9 in the third quarter and 18.5 in the second quarter.

Survey Date CEO Economic Outlook Index 2009 Q4 71.5 2009 Q3 44.9 2009 Q2 18.5 2009 Q1 -5.0 2008 Q4 16.5

The Index is a composite diffusion index that combines member CEO projections for sales, capital spending and employment in the six months ahead. The Index is centered on 50, and results can range from negative 50 to positive 150. An Index reading of 50 or lower is consistent with overall economic contraction and a reading of 50 or higher is consistent with expansion.

Results of all surveys can be found at http://www.businessroundtable.org/ceo_survey>