Seventy percent of chief executives of top US companies are downbeat about economic prospects for 2005, according to a survey published Wednesday by The Business Council – a body representing 125 major corporations such as DuPont, General Electric, General Motors and Procter & Gamble.

The fifty ceos who responded to the survey were notably more bearish than most economists in their expectations, forecasting growth ranging from zero percent to a high of 2%. Observed Dupont chairman/ceo Charles Holliday: "Generally CEOs are a bit more pessimistic."

As to jobs, nearly half the respondents don't expect to hire additional staff in 2005, although 58% believe the unemployment rate will fall marginally next year from the current level of 5.4% to between 5.3% and 5.0%.

There is similar caution over global prospects, just 19% of chief executives anticipating year-on-year growth. The exponential rise and rise of the Chinese economy is seen as the one ray of light

But China is also a source of a spike in raw material costs that is hitting corporate profitability below the belt. Complains General Motors chairman/ceo Rick Wagoner: "There is little pricing power at all in the industry."

He was referring to the difficulty of passing on higher raw materials costs to the customer. "That's definitely putting a squeeze at all levels. It's more challenging today than it was a year ago and I don't think next year at this point from what we see provides a lot of relief."

The reasons for such pessimism? The sustained rise in oil prices triggered by strong worldwide demand and fears of a shortage; concerns about supply disruptions created by terror attack and worries over Russian oil company Yukos. However, most ceos think oil prices will dip below the current level of $40-plus per barrel by this time next year.

However, the corporate mood broke through the optimism barrier when it came to prospects for their own companies. Half of those polled expect to see profit growth accelerate in 2005, although a minority (18%) believe growth momentum in their companies will slow in 2005.

Around one third of the executives predict wages will increase, and approximately 80% expect 2005 capital expenditure to be at least as strong as this year. The costs of benefits is also forecast to rise, largely through increased medical insurance premiums.

Data sourced from Reuters/Google; additional content by WARC staff