Harris Poll: Execs Don't See The Party Ending

The economic tea leaves aren't too conclusive of late. The Purchasing Managers' index for May rose to its highest level since late 1994. Yet April's consumer spending was up just 0.1%, and the Conference Board's index of leading indicators actually declined.

How does all this leave executives? Still feeling sanguine, according to a semi-annual BUSINESS WEEK/Harris Executive Poll of expectations for the next 12 months. Execs' view of their companies' prospects actually has improved since December, and they are looking to hire more workers. The sole cloud: interest rates, which most now think will move up.

This is an extended, online-only version of the poll that appears in the June 16, 1997, issue of Business Week.

      THE BIG PICTURE
      How would you characterize your outlook for the U.S. economy?
                       MAY 1997 DEC. 1996                 MAY 1997 DEC. 1996
      Very optimistic     19%     13%       Somewhat
      Somewhat                              pessimistic        3%      7%
      optimistic          77%      80%      Very pessimistic   1%      0%
      
      TAKING BETS ON GROWTH
      Compared with the past 12 months, do you think the rate of growth of the gross domestic product will go up, go down, or stay the same?
              MAY 1997 DEC. 1996            MAY 1997     DEC. 1996
      Go up      27%     27%     Stay the
      Go down    21%     18%     same         52%           55%
      
      PRICE HIKES?
      Compared with the past 12 months, do you think the rate of inflation will go up, go down, or stay the same?
      
                MAY 1997 DEC. 1996              MAY 1997 DEC. 1996
      Go up        37%     31%     Stay the same   58%     63%
      Go down      5%      5%      Don't know      0%      1%
      
      TRACKING TREASURIES
      Compared with where it is right now, do you think the 30-year Treasury bond rate will go up, go down, or stay the same?
      
              MAY 1997 DEC. 1996              MAY 1997 DEC. 1996
      Go up      52%     38%     Stay the same   31%     39%
      Go down    14%     17%     Don't know      3%      6%
      
      THE JOBLESS ISSUE
      Compared with the past 12 months, do you think the unemployment rate will go up, go down, or stay the same?
              MAY 1997 DEC. 1996              MAY 1997 DEC. 1996
      Go up      23%     28%     Stay the same   57%     53%
      Go down    20%     19%
      
      COMPANY REPORT CARD
      And now some questions about your company. Do you think each of the following will increase or decrease?
      
                   INCREASE DECREASE STAY    DON'T   AVERAGE EXPECTED
                                     SAME    KNOW    INCREASE
      Sales
      MAY 1997        93%     2%      4%      1%      9.8%
      DEC. 1996       92%     1%      6%      1%
      Full-time employees
      MAY 1997        55%     21%     23%     1%      1.8%
      DEC. 1996       48%     18%     34%     0%
      Investment in plant and equipment
      MAY 1997        64%     12%     22%     2%      4.4%
      DEC. 1996       65%     11%     21%     3%
      Typical prices of standard products or services
      MAY 1997        57%     14%     27%     2%      1.9%
      DEC. 1996       37%     20%     41%     2%
      Exports
      MAY 1997        55%     8%      11%     26%     6.0%
      DEC. 1996       40%     4%      19%     37%
      
                   INCREASE DECREASE STAY    DON'T   AVERAGE EXPECTED
                                     SAME    KNOW    INCREASE
      Wage and salary rates
      MAY 1997        89%     1%      10%     0%      4.0%
      DEC. 1996       84%     1%      15%     0%
      Health-care costs per employee
      MAY 1997        64%     11%     21%     4%      3.3%
      DEC. 1996       55%     15%     29%     1%
      Investment in Research & Development
      MAY 1997        53%     12%     26%     9%      4.8%
      DEC 1996        51%      7%     34%     8%
      
      RATING THE FEDERAL RESERVE
      How would you rate the job Alan Greenspan and the Federal Reserve are doing -- excellent, pretty good, only fair, or poor?
      
                   MAY 1997 DEC. 1996               MAY 1997 DEC. 1996
      Excellent       39%     50%     Poor            1%      0%
      Pretty Good     53%     44%     Don't know      0%      2%
      Only Fair        7%      4%
      
      JUDGING THE PRESIDENT
      How do you rate President Clinton's handling of the economy --excellent, pretty good, only fair, or poor?
      
                   MAY 1997 DEC.1996                MAY 1997 DEC.1996
      Excellent       4%      5%      Poor            9%      10%
      Pretty good     43%     40%     Don't know      1%      4%
      Only fair       43%     41%
      
      LONG-TERM GROWTH
      Some experts believe that, because of higher productivity, the economy now can sustain a higher rate of growth and lower unemployment without causing inflation. Do you agree, or disagree?
      
      Strongly agree          16%
      Somewhat agree          69%
      Somewhat disagree       13%
      Strongly disagree        2%
      
      BUDGET MATTERS
      White House and congressional negotiators have reached a settlement that would balance the federal budget in 2002. Do you agree or disagree that:
      
                                              AGREE  DISAGREE DON'T
                                                              KNOW
      The balanced budget will produce
      long-term gains for the economy           75%    22%     3%
      Negotiators have only delayed
      spending that will send the budget
      out of balance after 2002                 59%    33%     8%
      Balancing the budget at this point will
      have little effect on the economy         41%    57%     2%
      The deal ultimately won't balance
      the budget by 2002                        75%    21%     4%
      
      CAPITAL-GAINS EFFECT
      As a result of budget negotiations, the capital-gains tax could drop from 28% to 20%. What effect do you think such a cut would have on investment?
      
      Spur significant new investment throughout the economy     39%
      
      Encourage only modest investments in certain industries    42%
      
      Have little effect on investment, producing only a tax
      savings for individual investors.                          18%
      
      Don't know                                                 1%
      
      

Survey of 403 senior executives at large public companies. Interviews were conducted May 19-30 for BUSINESS WEEK by Louis Harris & Associates Inc.

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