/www.bloomberg.com/ Boca Raton, Florida (Bloomberg) -- A majority of leaders of the largest U.S. companies expect the economy to expand at about the same pace as last year and say that federal tax cuts proposed by the White House would spur growth, a survey of the 180- member Business Council found.
About 72 percent of the chief executives polled said they expect the economy to grow at about 2.4 percent, the same as 2002. At the same time, 56 percent said they believe the economy has pulled out of recession. Growth in profits will be about the same as or lower than last year, three quarters of the respondents said.
The survey results were reported before two days of Business Council meetings by more than 100 leaders of Fortune 500 companies in Boca Raton, Florida. Economists said they will be looking to the meetings for hints about corporate America's spending plans, which many believe would help the economy grow at a more robust pace. Federal Reserve Chairman Alan Greenspan and others argue that much of the spending resistance is because of uncertainty tied to the prospect of a war with Iraq.
In testimony to House and Senate leaders last week, Greenspan said the risk of war ``makes discerning the economic path ahead especially difficult.'' Once the outcome in the Middle East is clear, ``we should be able to tell far better whether we are dealing with a business sector and an economy poised to grow more rapidly -- our more probable expectation,'' he said.
``Geopolitical events'' were listed by the CEOs in the survey as the biggest factor restraining economic growth this year. Other factors were weak economic growth overseas and higher energy prices. At the same time, most of the executives said the prospect of war in Iraq didn't alter their plans for this year.
`Yes' to Tax Cuts
On the plus side for the economy, the respondents listed world events again, pending the resolution of the Iraq situation. Federal tax cuts also garnered support among those responding, with 86 percent saying they favored the tax-cut package proposed by President George W. Bush.
Inflation gains won't be a concern for most of the chief executives responding. About 71 percent said they expect the consumer price index to rise by 1.1 percent to 2 percent this year.
Most company leaders said they expect to be caught in a squeeze, unable to boost their prices as much as their costs rise. The majority said producer prices would either fall or remain unchanged this year. Sixty percent said they expect wage growth to be on track with last year's 3.2 percent rise.
Based on the answers, the labor market won't be much better off by the end of the year. About 63 percent forecast that the jobless rate would end the year between 5.6 percent and 6.2 percent. It fell to 5.7 percent in January.
Rising health-care and other employee costs were a concern among the majority of the business leaders. The increase in such benefit costs is likely to accelerate this year, 64 percent predicted. Within their own companies, 86 percent said they expected the increase in those costs to be higher.
Big Hitters
At 5 p.m. local time today, members of the Business Council's executive committee were to discuss their individual business decisions at a press conference.
They were to include Wal-Mart Stores Inc.'s H. Lee Scott Jr., General Electric Co.'s Jeffrey Immelt, Procter & Gamble Co.'s A.G. Lafley, Bechtel Group Inc.'s Riley Bechtel, Bank One Corp.'s James Dimon, Avon Products Inc.'s Andrea Jung, Fannie Mae's Franklin Raines, and DuPont Co.'s Charles Holliday Jr., who is also chairman of the Business Council.
On Thursday and Friday, the more than 100 chief executives in attendance will hold a series of closed-door meetings to discuss issues including world events, the rising cost of health care and how the public views corporate America, according to Clif Webb, a spokesman for DuPont's Holliday.
A panel of current and former state attorneys general from Iowa, Pennsylvania and Maine has been convened to discuss the issue of public trust, Webb said. U.S. Senate Majority Leader Bill Frist is to speak at dinner Thursday night.
Tennis or Spa?
Much of the conversation will take place outside the meeting chambers at the sprawling Boca Raton Resort & Club. The chief executives have their share of choices, between the resort's golf course and tennis courts, its beach club and spa, and its marina, which can accommodate vessels up to 170 feet long.
At the meetings a year ago, the chief executives were more upbeat than they have been in recent months. John Snow, then chief executive of CSX Corp. and now U.S. Treasury Secretary, said in a Bloomberg News interview that ``there's a reason to feel that the worst is over, that we've hit bottom and are beginning to come out.''
Executives' opinions were more guarded at the October meetings, which were held at the Greenbrier Resort in Sulphur Springs, West Virginia. In the survey issued then, the number of executives reporting better business conditions than three months before plunged to 29 percent from 62 percent.