–Boeing CEO: Fed Mon Pol Action Not Making Big Impact On Econ Activity

By Ian McKendry

WASHINGTON (MNI) – Leaders of the largest U.S. companies say
uncertainty surrounding the upcoming “fiscal cliff” has them lowering
their sales forecasts and holding off on investments and hiring plans.

The Business Roundtable, whose membership includes CEOs of U.S.
companies that employ over 14 million employees, released the results of
a survey Wednesday showing that respondents overall were less optimistic
about the economy over the next six months.

“While expectations are for a continued slow expansion, the results
reflect member CEOs continuing concern over obstacles to a stronger
economic recovery, chief among those concerns is growing uncertainty,
whether the administration and Congress can resolve the so-called fiscal
cliff issues,” James McNerney, CEO of Boeing and chairman of the BRT
told reporters during a conference call following the release of the
second quarter BRT CEO survey.

“I think the regulatory tax and budget environment is not clear and
I do know of some companies who are holding back for some clarity,” he
added.

McNerney said the sovereign debt situation in Europe and an
economic slowdown in Asia are both concerns, but less so than the
“so-called fiscal cliff” in the United States/

He added that Europe is more of a concern than Asia because the
“European situation could decelerate quickly” while a slowdown in China
would mean the difference between 6% growth instead of 9% and is “less
of a concern longer term.”

When asked if he thought monetary policy actions taken by the Fed
— this was before the $267 billion maturity extension program was
announced Wednesday — could bolster the economy, McNerney said he
thought it would have more of an impact on the markets than the real
economy.

“The fiscal taxation, regulatory questions, budget questions are
far more important to the on-the-ground economic growth than the next
move by the Fed,” McNerney said.

“I don’t think those moves will have a big impact on economic
activity, that is a bit of a personal view,” he added.

In a press conference Wednesday, Fed Chairman Ben Bernanke said the
Fed also believes the clouded outlook for fiscal policy will be a drag
on the economy.

“Moving forward in the year, we anticipate that the uncertainty
associated with the so-called fiscal cliff will have some economic
effects,” Bernanke said.

McNerney continued, saying “the cold-eyed view is that there will
be paralysis” on Congress coming to an agreement on tax policy, adding
he believes members would rather see Congress come up with an imperfect
resolution sooner rather than a perfect situation later.

McNerney reminded that when businesses make hiring and capital
spending decisions they are investing long term and therefore need
certainty before they make those investments.

He said until then, businesses will remain conservative when
it comes to hiring and spending decisions.

** MNI Washington Bureau: 202-371-2121 **

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