business news in context, analysis with attitude

USA Today reports on a new study by the Business Roundtable saying that 31 percent of the nation’s CEOs expect to cut their payrolls in the coming months – up from 22 percent who said the same thing way back in April 2008.

Here’s the interesting thing. These cuts are expected to be a reaction to the housing crisis and the increased cost of energy, but these same CEOs say that they expect sales and capital investments to remain at current levels of even improve between now and the end of the year.

According to USA Today, “That's consistent with expectations from the Federal Reserve and other economists who say they think the fragile economy will strengthen later this year and into next year — even as the nation's unemployment rate, a lagging indicator of business health, rises. As in the past, many employers won't want to ramp up hiring until they are sure the economy is really back on a firm footing.”

KC's View:
I’m not as sure as the Federal Reserve and these economists that we’re in for any sort of sustained or meaningful rebound by the end of the year, especially if gas prices and unemployment rates continue to rise. In fact, if there’s a rebound despite these two trends, wouldn’t that rebound be defined as illusory?

I would suggest that if executives really expect a rebound to come, this would be a good time not to lay people off…but rather to use the moment to go out and aggressively get new customers, market new services and products, and establish a beachhead on the landscape of consumer expectations. Act as if you are dealing from a position of strength…because if the competition is weakened or just is acting like it, that’s a perfect time to make inroads.