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Optimistic Outlook
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Strong
economic conditions to continue according to CEO/RCGA survey of
St. Louis business leaders.
St. Louis area business leaders expect the U.S. economy to continue
at a healthy pace in 2001, according to a recent survey of members
of the RCGA commissioned by the Civic Entrepreneurs Organization
(CEO). About half of the more than 350 survey respondents expect
gross domestic product (GDP) growth to average 3 to 4 percent,
with an additional 9 percent of respondents predicting real GDP
growth at greater than 4 percent.
The survey was sent to more than 3,000 RCGA members earlier this
summer and had a margin of error of +/- 5.3 percent. Responses
to the survey were tabulated and summarized by staff in the research
department of the Federal Reserve Bank of St. Louis.
This response appears slightly more upbeat than consensus estimates
of professional forecasters. The August 2000 Blue Chip Economic
Indicators projected real GDP to increase 3-1/4 percent between
the fourth quarters of 2000 and 2001.
Full survey findings were available at CEO’s 13th annual Economic
Forecast last month, at the Regal Riverfront Hotel.
Nationally known CEO Economic Forecast speakers at the event included:
Irving R. Levine (moderator), former NBC News chief economics
correspondent;
Steve Forbes, former Presidential candidate and president
and CEO of Forbes, Inc. and editor-in-chief of Forbes magazine;
Alice Rivlin, former vice chair of the Federal Reserve
Board, former director of the White House Office of Management
and Budget (OMB); currently a senior fellow with the Brookings
Institution;
Joseph Battipaglia, chief of investment policy for Gruntal
& Co., LLC, a frequent commentator to the national media and recognized
investment strategist; and
Charles Pradilla, chief financial strategist for SG Cowen,
and adviser on asset management, fixed income, equity trading,
investment banking and international markets.
The CEO survey indicated St. Louis business leaders believe general
business conditions are stronger today than a year ago. However,
as in last year’s survey, most respondents still find it difficult
to raise prices on goods and services, while tight labor markets
are forcing many companies to increase wages and salaries or add
other forms of compensation. Nevertheless, a majority of survey
respondents indicated they are planning to expand their operations
during the next 12 months, including adding to their work force
and boosting capital spending.
“On behalf of the more than 80 CEO members — each of whom manages
a successful company in the St. Louis region — I’ll say we’re
pleased our annual survey again found a positive business outlook
for the coming year,” says Tom Campbell, CEO president and partner
of Gallop, Johnson & Neuman, L.C. law firm.
“It’s encouraging to see St. Louis business leaders again taking
an optimistic view of the coming year,” says Dick Fleming, president
and CEO of the RCGA. “They see their companies’ profits rising,
expanded hiring and higher investment in technology, efficiency
and corporate growth. As we saw in last year’s results, area leaders
continue to find St. Louis to be a dynamic, supportive place to
build and grow successful companies in diverse industries,” he
adds.
Highlights of the survey findings include:
Economic growth — About 60 percent of respondents say business
conditions are stronger and will continue to be so throughout
the next year. Over half of the respondents believe real GDP growth
will average 3 percent or better. This estimation parallels experts’
predictions that real GDP will increase a little more than 3 percent.
Business plans — Similarly, about 60 percent indicated
they plan to expand operations over the next 12 months —with manufacturing,
communications and media, and technology industries the most optimistic.
Finding qualified workers to support such expansion may be difficult
as three-quarters of the firms expressed the view that an adequately
trained work force is not readily available in the St. Louis area.
Accordingly, to attract needed employees, the majority of respondents
had to pay higher wages and benefits.
Inflation and interest rates — Respondents are split about
the future of inflation; about 40 percent expect inflation to
average 3 to 4 percent, while a similar percentage see inflation
ranging from two to three percent. A significant majority sees
no change in the Federal Reserve’s federal funds rate, with only
25 percent forecasting additional increases.
Profitability — About 70 percent said the past year’s spikes
in energy costs have not hampered profitability. Projections of
continued profitability are optimistic, with about three-fifths
anticipating a 10 percent or more rise in profits
Stock market — Respondents are split concerning the direction
of the stock market; about 55 percent see prices increasing in
the next year, while about 40 percent do not.
The Internet — Roughly 75 percent of respondents indicated
that the Internet is an important part of their business strategies,
especially in the customer sales and business-to-business arenas.
In addition to its annual Economic Forecast and National Technology
Forum, CEO also supports programs and events in the St. Louis
metro area including the Saint Louis Art Fair, Missouri Valley
Conference post season basketball tournament and the Saint Louis
International Film Festival. Over the past decade, CEO has generated
more than $30 million in positive economic impact on the St. Louis
region through its sponsorship activities. For information on
CEO and its programs, check CEO’s website at www.ceo-stlouis.org.
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