Watch Out Below

For anybody who's been paying attention, it's no surprise to learn, according to an association of chief executive officers of leading U.S. companies with more than $7.3 trillion in annual revenues, that CEOs have sharply reduced expectations for the U.S. economy:

Policy Uncertainty Drives Weak Outlook on Sales, Hiring, Capital Spending and GDP

Washington – The results of Business Roundtable’s (BRT) third quarter CEO Economic Outlook Survey for 2012 show a further downturn in CEOs’ expectations for sales, capital spending and hiring for the next six months. The Business Roundtable CEO Economic Outlook Survey Index decreased to 66.0 in the third quarter of 2012 from 89.1 in the second quarter of 2012, the lowest reading since the third quarter of 2009 and the third largest single quarter drop in the survey’s history.

“CEOs foresee slower overall economic growth for 2012 and have lower expectations for sales, capital expenditures and hiring compared to last quarter,” said Jim McNerney, Chairman of Business Roundtable and Chairman, President and CEO of The Boeing Company. “The downshift in quarterly sentiment reflects continuing concern about the strength of the recovery, including uncertainty over the approaching fiscal cliff and accompanying debates about the tax code, sequestration and the debt ceiling.”

For those of you who are into technical analysis (I happen to be a fan), the BRT's Economic Outlook Index appears to have traced out a "head & shoulders" top -- a chart pattern that is often seen before a precipitous drop.

Of course, this time is different -- right?

Michael J. Panzner