–Oil Price Spikes May Effect Consumer Spending
–Impact Of Events In Japan Will Take Time To Determine

By Ian McKendry

WASHINGTON (MNI) – Chief executives of some of America’s largest
companies expect to increase capital expenditures on their expectation
of a pick up in sales over the next six months, a survey conducted by
the Business Roundtable indicated Wednesday.

“We are starting to see capital deployed to expand production,”
said Ivan Seidenberg, CEO of Verizon Wireless and Chairman of the
Business Roundtable, during a conference call with reporters following
the survey’s release Wednesday.

Seidenberg said an increase in consumer spending is the main driver
of sales forecasts is, but admitted that recent and unforseen
geopolitical issues such as rising oil prices could affect consumers.

John Englar, president of the BRT — who was also on the call —
said higher oil prices tend to affect consumer spending very quickly and
that can be seen in surveys like the University of Michigan’s Consumer
Sentiment survey.

The BRT survey was conducted between February 20 and March 18 and
Seidenberg said due to the timing of the survey, participants did not
take into account the recent price spikes in oil and the earthquake in
Japan.

“Nobody took into account this little bump we have seen over the
last 30 days,” Seidenberg said in reference to oil prices.

“It’s to early to suggest that there is any permanent impact on the
momentum that we are reporting in our results, but we will keep in tune
with our membership,” Seidenberg added.

On the earthquake that hit Japan, and the following nuclear crisis,
Seidenberg said the event did not have any significant impact on the
survey but said many companies like his own are going back and looking
at what sort of effect they might have on their supply chain.

“It is going to take a few more months for people to really figure
out the full impact on business,” Seidenberg said.

Seidenberg added that any company experiencing a material impact
from the events in Japan will probably report that in their earnings
results in April and May.

Seidenberg was more concerned at the possibility of a government
shutdown.

“You would have all sorts of disruptions in the value chain, the
supply chain, government services, so hopefully that can be avoided”
Seidenberg said.

“My guess is that everybody answered this survey anticipating the
government would not be shutdown, so to me the survey results would need
to be set aside if there is actually any kind of protracted shutdown,”
Seidenberg added.

The survey, conducted for the first quarter of 2011, marked the
third time in a row that the CEO economic index improved. The index is
derived from the survey results.

“We see some stability in increasing capital spending, we certainly
will see sales forecasts go up and as we do that we will start to see
hiring,” Seidenberg said.

Englar said 52% of CEOs who were surveyed expect to hire new
employees over the next six months, which is the highest it has been
since the survey began in 2002.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$]