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REGIONAL
EXECUTIVES SEE STRONGER ECONOMIC CONDITIONS, YET EXPECT SLOW GROWTH
IN 2004
Economic conditions have improved from a year earlier, according
to St. Louis-area business executives surveyed by the Civic Entrepreneurs
Organization (CEO) and the RCGA. Contrasting with the consensus
estimate of national forecasters, however, the majority of area
business executives surveyed do not expect a brisk acceleration
of U.S. real GDP growth over the coming four quarters. Despite improved
business conditions, many executives remain reluctant to expand
their business operations, add to payrolls, or boost their outlays
for equipment, software or new structures.
Full findings of this annual survey are available on both the CEO
and RCGA websites and they will be provided at CEO’s 16th annual
Economic Forecast, held from 11:45 a.m. to 1:30 p.m., Friday, Oct.
17, at the Renaissance Grand Hotel downtown. Reservations are available
from CEO at (314) 615-8283 or www.ceo-stlouis.org/
2004EconomicSurvey.htm.
Nationally known CEO Economic Forecast speakers will include:
• Irving R. Levine, moderator; commentator for PBS-TV’s “Nightly
Business Report,” former NBC News chief economics correspondent
and dean of the College of International Studies at Lynn University
in Boca Raton, Fla.
• Steve Forbes, president & CEO of Forbes Inc. and editor-in-chief
of Forbes magazine
• Marci Rossell, Ph.D., former chief economist for CNBC, spokesperson
for OppenheimerFunds Inc., litigation consultant for Deloitte &
Touch, LLP, and economist for the Federal Reserve Bank of Dallas
• Brian Wesbury, first vice president and chief economist at Griffin,
Kubik, Stephens & Thompson Inc.
• Alan F. Skrainka, CFA, chief market strategist
Nearly two-thirds of the St. Louis business executives surveyed
expect no change in the Fed’s monetary policy stance over the next
12 months. They are not worried about an increase in inflation,
nor are they worried about the possibility of deflation developing
in the United States. In assessing potential developments that might
derail the recovery, the executives are most concerned about an
upswing in federal government spending and rising budget deficits,
the threat of additional terrorist attacks and a return of heightened
financial market instability and falling stock prices. Local workforce
issues, (such as the lack of qualified workers), some over-building
in the commercial and industrial sectors and the effectiveness of
local economic development organizations are also areas of concern.
Consistent with recent CEO/RCGA surveys, many of the 179 business
executives responding to the survey said they continue to find it
difficult to raise prices. Although St. Louis-area executives are
generally upbeat about stock market prospects over the coming year,
they are less positive about profit prospects for their own companies.
The majority of executives expect loan availability to improve over
the next 12 months, although they are more evenly split on whether
market interest rates will rise or remain unchanged, according to
survey responses tabulated and summarized by the Research Department
of the Federal Reserve Bank of St. Louis.
A majority of St. Louis-area business executives (61 percent) reported
that general business conditions are stronger today than they were
a year earlier, compared with 39 percent who thought not. Despite
an improved economic climate, 55 percent said they plan to hire
more employees, while 45 percent do not. The expansion and employment
outlook is considerably brighter in the high-tech and finance/insurance/real
estate industries, while the outlook is generally less bright in
the retail/wholesale trade sector.
Consistent with the last few surveys, St. Louis-area companies reported
that the percentage of their total revenues derived from overseas
sales is not increasing. Likewise, the Internet remains an important
business tool for boosting sales. Internet-related sales were generally
rated as less important in only two industries: construction and
manufacturing.
“On behalf of CEO, whose members include some of the area’s top
executives and business leaders, we’re pleased our survey continues
to show a positive outlook,” said CEO President Gerald J. Carlson
of KPMG LLP. “We’ll see how St. Louis predictions compare with those
of our national and international experts at the 16th annual Economic
Forecast.”
“As we’ve seen consistently in this annual survey, area business
leaders find St. Louis to be an attractive and supportive place
to build and grow successful businesses in all kinds of industries,”
said Richard C. D. Fleming, president and CEO of the RCGA. “The
fact that most leaders still plan to increase hiring and business
investment is good news for the region, although we have some real
challenges ahead in 2004.”
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