U.S. executives saw conditions worsening before crash

By Michael Erman

KIAWAH ISLAND, South Carolina (Reuters) - Top U.S. executives were bracing for a downturn even before the financial markets collapsed late last month, according to a survey conducted in September by the Business Council.

Nearly three-quarters of the CEOs surveyed last month saw global conditions eroding over the next two quarters and 91.6 percent said U.S. conditions were worse in September than they had been six months earlier.

The results were released at the Council's biannual meeting at a South Carolina resort on Thursday. The survey, which compiled results from 71 chief executives at some of the largest U.S. companies, was conducted between September 5 and September 17.

"Even more striking than the further weakening in the U.S. outlook is the growing pessimism associated with business conditions in Europe and Asia," Business Council Vice Chairman and JP Morgan Chase & Co CEO Jamie Dimon said in a statement.

"Overall, the global economy appears to have been weakening going into the crisis, which suggests that the events of recent weeks could hurt company performance in many of the fast- growing emerging market economies as well," Dimon said.

Around half of the executives polled believe business conditions will deteriorate in China and the rest of Asia over the next six months and 80 percent see Europe's business climate getting worse over the same period.

Since September 17, when the Council received its last responses to the survey, the Standard and Poors' 500 index has lost more than 18 percent of its value.

When the survey was conducted, 7 percent of the CEOs expected the U.S. economy to decline in 2009 and over 80 percent expected it to grow between 0 percent and 2 percent.

Sixty-five percent of respondents expected U.S. unemployment between 5.8 percent and 6.3 percent and 20 percent of the CEOs expected it to be higher.

The Conference Board, another business organization, helped compile the results.

Economist Gail Fosler, president of that group, said in a foreword to the survey: "The financial crisis is reaching out to touch not only the broad sweep of the U.S. economy, but also the banking and credit systems in Europe and elsewhere.

"It will be very difficult for the United States and many other global economies to avoid a recession."

(Editing by Andre Grenon)