Bull Market in Global Executive Pessimism

Company executives have become markedly more pessimistic in the past month, according to a global survey conducted in early December by McKinsey & Co., with twice as many executives now saying they expect their companies’ profits to decline in 2009, compared with a month ago.

More executives said they expected to reduce the size of their workforces in the near term — 44 percent versus 39 percent previously. McKinsey said job reductions were aimed at raising cash rather than boosting profits, according to the executives.

Just over half expect deflation in the first quarter, and the economic downturn appears to have begun hitting developed markets harder over the month, with much higher proportions of executives in those countries saying conditions have gotten ’substantially worse.’

By region, Eurozone executives were least likely to say their companies have suffered lower profits as a result of the global economic turmoil, and Chinese executives more likely to say their companies have taken a hit.

Despite the gloom and doom in the corner office, McKinsey sees industry bright spots over the longer term in steel and high tech –specifically IT spending. The report, “Industry Trends in the Downturn,” is available free on The McKinsey Quarterly Web site.

Comments

[Moon Kil Woong:]

Hmmm steel. McKinsey likes steel. You mean the stuff China has in surplus right now which accounts for 18% of annual steel supply and growing since their mills are run by state entities that want to keep producing despite market forces. I wonder who is there wanting to unload a lot of losers this fine 2009. What chart is he reading, the what would happen if steel will magically become the reserve metal of the world effect chart?

I think it's spot on for execs to be gloomy this year. That is unless you're Fannie Mae or Freddie Mac where it doesn't much matter what's going on because you can fail all you want and still never loose your job. In fact, the more money you loose the more money you get. Gee AIG, welcome to that club as well. I think Citibank is next on the who's who of exempt companies rewarded for market mayhem.

2008 Dec 30 02:48 AM