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Corporate leaders upbeat on economy

Corporate leaders upbeat on economy

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WASHINGTON - The country's top corporate executives foresee pretty good business prospects even as the economy makes its way through a sluggish spell.

A survey by the Business Roundtable, released Tuesday, also showed that most executives expected sales, capital investment and hiring to remain at current levels or be boosted in the coming months.

Chief executive officers "see favorable business conditions continuing," said the group's chairman, Harold McGraw III, president and chief executive officer of The McGraw-Hill Companies. "While the survey does suggest that the U.S. economy is settling into a somewhat softer consolidation phase, as long as consumers keep spending, the economy can continue to move ahead," he added.

For all of this year, the Business Roundtable executives predict the economy will grow by 2.6 percent, which would be the slowest in four years. The new forecast is lower than the 2.9 percent projection released in early March. Other forecasters, however, think the economy's growth this year will be slower, at around 2.2 percent, mostly reflecting the impact of the painful housing slump.

"I think it is a more positive picture in CEOs' minds," McGraw told reporters.

Federal Reserve Chairman Ben Bernanke said Tuesday that he expects the economy to bounce back from an extremely weak first quarter. The economy's growth slowed to a pace of just 0.6 percent in the first three months of this year, the worst quarterly performance in more than four years.

The Fed chief said he believes some of the forces that figured prominently in that poor performance - including a bloated trade deficit, cutbacks by businesses in inventory investment and weak federal defense spending - will be partially reversed "in the near term." Even if that happens, the housing market will remain a drag on overall economic growth, he added. But housing's troubles, he said, should not seriously spill over into other business sectors.

In the survey, 92 percent of chief executives said they expected their sales to hold steady or increase over the next six months. That's up from 85 percent in the previous survey in March.

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