Wall Street and Main Street are often miles apart when it comes to how they view the world. But now there’s one thing they agree on: The economy’s not getting much better.
Consumer confidence went into a freefall in September, plunging to its lowest level since February, according to a new survey by the Conference Board. Meanwhile, CEOs have lower expectations about their companies’ business prospects and the size of their workforce than they did three months ago, according to a new Business Roundtable survey.
A sluggish economy and a stagnant job market contributed to the consumer malaise. The Conference Board’s closely watched monthly confidence index tanked at 48.5 in September, down from 53.2 in August. Anything south of 50 indicates pessimism.
“September’s pull-back in confidence was due to less-favorable business and labor market conditions, coupled with a more pessimistic short-term outlook,” said Lynn Franco, director of the Conference Board Research Center in New York. “Overall, consumer confidence in the state of the economy remains quite grim. And with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months.”
The nation’s chief executives are also feeling gloomy. They have lower sales and employment expectations than they did last quarter, according to the quarterly survey of CEOs released this week. Sixty-six percent of the CEOs surveyed expected sales to increase in the next six months, down from 79 percent from second quarter survey by the Washington, D.C.-based association Business Roundtable. And just 31 percent expect to hire more workers in the next six months, down from 39 percent last quarter.
The one glimmer of hope in all this gloom and doom is that the CEOs plan increased capital spending over the next six months in spite of the current economic doldrums.
“Sales forecasts are down from last quarter, prompting CEOs to remain cautious,” said Ivan G. Seidenberg, chairman of Business Roundtable and chairman and CEO of Verizon Communications. “However, they are preparing for future demand by increasing investment in capital.”
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