Many chief executives of major U.S. corporations have lowered their sales expectations because of Hurricane Katrina but think the storm's effects will only modestly slow national economic growth, a business group said yesterday.
Nearly two-thirds of 97 chief executives surveyed last week said their businesses have taken hits because of Katrina's effects, including higher energy prices, physical damage to corporate facilities in the Gulf Coast region and supply problems caused by disruptions of transportation systems, according to the Business Roundtable, an association of chief executives.
But most of the respondents, 61 percent, characterized the hurricane's effects on their business as just "moderately negative." Just 4 percent described them as "strongly negative" while 14 percent said they were benefiting.
And collectively, the chief executives surveyed last week predicted that the economy would grow a solid 3.3 percent this year, just 0.2 percentage points less than predicted by executives surveyed by the Roundtable in August, just before the storm hit.
Many analysts had predicted similar effects and worried that the storm's economic damage could be more severe if businesses responded by sharply curtailing their spending and hiring.
"It looks to us that the economy is doing just fine," Henry A. McKinnell Jr., chairman and chief executive of Pfizer Inc. said at a news conference yesterday. The group "still expects a strong economy, but not as strong as before Hurricane Katrina."
McKinnell, who chairs the Roundtable, acknowledged that the group's view echoed that of Federal Reserve officials, who said Tuesday that they expect the hurricane to slow the economy in the short term.
Executives remain concerned, however, that economic conditions could worsen if energy prices go higher and consumers find their budgets further squeezed by rising inflation and interest rates, McKinnell said.
Noting the approach of Hurricane Rita in the Gulf of Mexico and of the harvest season in states that rely on the Mississippi River to move their goods to international markets, McKinnell said: "There's a great deal of uncertainty here."