The Glass Looks Half Full To Financial OfficersGene Koretz
Cassandras who see a double-dip recession and a slumping stock market ahead should take heart. Corporate America's financial strategists are forecasting a slow, uninterrupted recovery in 1992. That's the mildly reassuring message from a survey of the chief financial officers of the business week 1000 by A.T. Kearney Inc., a New York consulting firm. Says Goodyear Tire & Rubber Co. cfo Oren G. Shaffer: "There's a slight upturn, and it starts this quarter. The economy has stopped searching for a bottom."
Looking ahead, the cfos think the economy will grow by 2.5% in 1992 (table), enough to warrant a 6.2% pickup in capital spending. And stock prices will hang in there, with the Dow Jones industrial average inching up to 3,287. Meanwhile, the slow recovery promises to keep both inflation and interest rates restrained. Consumer prices will rise less than 4%, the cfos say, and long rates should rise only 30 basis points by the end of 1992, compared with a still-modest 130 basis-point increase in three-month T-bill rates (from 4.7% now to 6% next year). That nudge-up implies that the dollar won't strengthen enough to hurt the competitiveness of U.S. exports overseas.
On the bad-news front, 1992 will see continued belt-tightening via layoffs and other measures. General Electric Co., for one, has already announced a cut of 1,500 jobs-almost 5% of its work force-through the end of next year because the airline industry is in a slump and military outlays are down. Says Earl S. Landesman, a Kearney principal: "The larger the company, the more they'll want to squeeze overhead."
While they aren't pressing the panic button, the cfos appear to be concerned about the U.S. domestic economy's lack of resilience. Indeed, many seem to be pinning their hopes for faster growth beyond 1992 on renewed stimulus from overseas. "Look for when the European and Asian economies recover," says ge cfo Dennis D. Dammerman. "They'll be able to help us out."