Table: Why They Worry
Despite a wave of encouraging data, other factors make CEOs reluctant to act on the good news
While the economy could grow 3% to 4% in the first half of the year, inventory replenishment is driving much of that rise. Many execs fear that growth will slow in the second half once shelves are restocked.
Corporate earnings have suffered one of the worst declines since World War II. Even if the current 17% consensus earnings estimate for the S&P 500 is right, that would only get profits back to their 1999 levels.
Consumer demand remains strong. But with steep discounts fueling much of that demand, margins remain thin. That is forcing CEOs to rein in costs and continue implementing layoffs and wage reductions.
Capacity utilization in manufacturing was just 73% in January, the lowest since 1983. Most managers won't feel things are really humming until they see a much bigger upturn in demand.
Many CEOs got walloped by Wall Street for posting weak earnings. So most would rather underpromise now and benefit later if profits improve toward yearend.