Execs See No Roadblocks for Growth Engine
There are no serious threats on the horizon to the current record-breaking economic expansion, although growth will be a bit slower this year and inflation will be higher, the nation’s top business executives said Wednesday.
The Business Council, composed of chief executives of the nation’s largest corporations, issued a revised outlook predicting that the U.S. economy, now in a record 10th year of uninterrupted growth, is continuing to show remarkable vitality.
“The United States clearly continues to defy expectations and council members don’t see too much change over the near term,” the group said in a report presented by Sanford Weill, chairman of Citigroup.
For their own companies, the business executives generally characterized current business activity as either stronger than six months ago or little changed.
For the economy overall, the executives did forecast a slowdown in growth this year after three straight years in which growth as measured by the gross domestic product has been above 4%.
The Federal Reserve has raised interest rates five times since last June in an effort to slow the economy.
Analysts believe there will be a sixth rate increase when the Fed meets again Tuesday, given the fact that the economy in the first three months of this year grew at a 5.4% annual rate, well above the Fed’s 3.5% speed limit.
The business executives believe that inflation will increase this year but remain in a moderate range this year and in coming years between 2% and 3.9%. Consumer prices rose last year by 2.7%, the fastest advance since a 3.3% increase in 1996.
Even though they were forecasting a rise in overall inflation, most council members said their own firms’ pricing power is either weaker than it was six months ago or little changed.
Nearly all the council members reported that labor market conditions remained tight, with very few looking for that to change over the next six months. In response, a majority of the executives said they had been increasing salaries to retain employees or boosting benefits.
