CEOs see conditions worsening, no recession yet

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FORT LAUDERDALE, Florida (Reuters) - Top U.S. chief executives expect their industries to fare worse over the next six months as economic growth slows to a snail's pace, whether the United States is in recession or not.

By Scott Malone

FORT LAUDERDALE, Florida (Reuters) - Top U.S. chief executives expect their industries to fare worse over the next six months as economic growth slows to a snail's pace, whether the United States is in recession or not.

Eighty-one 81 percent of CEOs polled by the Business Council expect "sluggish" U.S. economic growth of between 0 and 2 percent this year, according to the group's survey released on Thursday.

"I don't know that there's that much difference in terms of business implications whether there's a significant slowdown or technically an outright recession," said Jim Owens, CEO of Caterpillar Inc <CAT.N> in an interview on the sidelines of the group's meeting in Fort Lauderdale, Florida, this week.

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Almost two-thirds of 83 U.S. CEOs surveyed said conditions in their businesses had worsened in the past six months. That's the first time since the survey took on its current form in 2005 that a majority of respondents have made such a grim forecast.

Slightly over half, or 53 percent, expect those conditions to weaken further in the next six months and 3.6 percent said they saw the U.S. economy declining during the coming year.

BETTER CONDITIONS ABROAD

Looking beyond the United States, 45 percent said they expect business conditions in Europe to worsen as well. Respondents were much more bullish on the prospects for Asian economies, with 85 percent expecting economic conditions to improve over the next six months.

One open question was how long the rest of the world would be able to withstand a slowing U.S. economy.

"If the U.S. economy really weakens, it will have (an) impact on the rest of the world, which so far has continued to grow, especially emerging markets," said Raj Gupta, CEO of specialty U.S. chemicals maker Rohm & Haas Co <ROH.N>.

In the United States, Rohm & Haas sells chemicals used in paint, among other products. While that business was suffering from the prolonged housing slump, Gupta said his company was not expecting the U.S. economy to enter a recession, but was preparing to tighten its belt if needed.

"We clearly have taken a little bit more aggressive posture in honing in our costs and our capital. Have we postponed or delayed anything yet? No, but I think in terms of looking at options if we have to pull the plug, we are well prepared."

JP Morgan Chase & Co <JPM.N> CEO James Dimon, who is vice chairman of the Business Council, echoed that sentiment.

"Business Council members appear to be taking a measured approach," Dimon wrote in a preface to the survey report. "Our members do not plan any radical changes in the pace of their capital investments and the split was virtually 50/50 on whether the pace of new hiring will slow."

Owens of Caterpillar, the world's largest maker of heavy equipment, said he expects the U.S. economy to experience a "soft landing" this year. However, robust growth overseas should keep his company to another year of record profits, he added.

(Additional reporting by Helen Chernikoff in New York; Editing by Brian Moss, Richard Chang)