The global financial crash was seven years ago, but now China has been laid low and Europe is being overrun by refugees. Brazil has tanked, and U.S. growth remains a paltry 2%. Meanwhile, stock-market gyrations are a continual source of whiplash and interest rates can’t seem to move much off zero.
Yet, the near-miraculous domestic auto recovery continues apace. Oil prices have slid, making consumers happier. The U.S. unemployment rate is back down close to the magic 5% number, and companies surely are hiring.
Spending on the presidential campaign alone could be enough to juice the economy. To be sure, disparate sets of indicators have been running through American CEOs’ heads as they try to sort out the direction of business heading into 2016. The good-news and bad-news scenarios aren’t easily reconciled and obviously tug at business chiefs in offsetting ways. Yet, on the whole, most CEOs report seeing a rosier picture than they have had in some time. Not only has the U.S. economy flipped decisively into a growth mode, demonstrating the ability to shake off one drag after another, but the nation has assumed global economic leadership once again.
So while being cautious, most company leaders have adopted a growth bias toward next year. “We look at the United States now as a shining city on a hill, pretty robust and strong and stable,” says David Zuchowski, CEO of Hyundai Motor America, owned by the Korean Hyundai Chaebol. “Our parent looks to us to help lead its global growth because of our stability.”
Asher Raphael, CEO of the mid-market leader Power Home Remodeling Group, echoes this bullish sentiment. “We feel confident in the U.S. economy,” he says. “The unemployment rate is a great indicator. Interest rates are still at all-time lows, banks are starting to lend again and consumer confidence is increasing. I feel like the country has finally stared down the Great Recession.”
Annually, Chief Executive magazine talks with a handful of notable CEOs, diversified by size, industry and geography, about their outlooks. This year’s group includes a wide swath of large, mid-market and even small companies, providing products and services, both consumer facing and business-to-business outfits.
We asked them three questions: What is in your crystal ball for your company and your industry for the year ahead? What is your outlook for the U.S. and global economies? And what issue or challenge are you most concerned about? Here are synopses of what 15 CEOs said.
HEADQUARTERED IN ATLANTA, THE CHICKEN-BASED, FAST-FOOD FRANCHISOR POSTED SYSTEM-WIDE REVENUES OF $2.7 BILLION LAST YEAR.
We are in a strong position, with 2015 being our seventh consecutive year of same-store sales growth. We’ve been building a couple hundred restaurants a year, a top number in our sector; and we are expanding globally with new franchisees in Chile, Peru and elsewhere. We’ve been in other places for a long time through our strong franchises including Central America, Singapore and Turkey.
Growth in the U.S. economy may be modest in 2016, a bit choppy, and certainly influenced by the global economy. I’m encouraged by the fact that gas prices are low and consumer confidence is
high. But interest rates will influence what happens in the U.S., and so will global questions. I’m hoping that 2016 is a mild year of modest growth and that we avoid recession.
My primary concern is about creating conditions for small business to thrive in this country. Right now, the lifeblood of our economy is at risk.
BASED IN AURORA, ILLINOIS, THE COMPANY IS A $10-MILLION MAKER OF ELECTRICAL CONNECTORS AND OTHER COMPONENTS FOR TELECOM AND OTHER INDUSTRIES.
Heavy-truck and utility markets will be strong, with things like retro-fitting of coal boilers. And obviously, the petroleum-related markets have come way, way back.
It’ll be much like every year since 2011. You have a few good months and things take off; then there’s a make-up month. I’m not sure what to think. We’ll stay at this level next year, though two years from now that’s a little less likely. The rest of the world is so spooked that it will continue to send shivers through the American economy from time to time; but largely the U.S. economy is strong, and unemployment is down.
If you’re not nervous reading forecasts of commodity-metals prices though, you’re not listening. Because of China, the worldwide demand is down significantly. But I’m still concerned about
unexpected news: It just freezes everyone in their purchasing patterns for a while.
SPUN OFF FROM GENERAL ELECTRIC IN 2014, THE COMPANY IS A $13-BILLION LEADER IN CONSUMER FINANCE, HEADQUARTERED IN STAMFORD, CONNECTICUT.
We will have to fight harder to get consumers to shop and use our credit cards. They want to shop, and an area that will be especially positive is things related to the home, such as furniture and flooring. That has held very well and will continue to hold.
The consumer is getting stronger. Wage compression has muted expectations a bit, but I feel good about where the consumer is positioned in our industry. I also believe that moving on interest rates is a positive sign for the economy—you can’t stay at zero forever. Movement says there is positive momentum in the economy.
I am concerned about the whole payment space in general. There’s still a big question about how quickly mobile wallets will take hold, but there is a lot of momentum there. And we want to make sure we’re staying extraordinarily relevant in the digital and mobile space.
HEADQUARTERED IN SAN FRANCISCO, THIS PROVIDER OF ONLINE SECURITY SERVICES REPORTED 2014 REVENUES OF $374 MILLION.
The world is wrestling with how to secure the online environment. In the coming year or two, the industry will really sort out the winners and losers and what consumers and businesses expect when they think about security.
Over the next couple of years, consumers and [small- to medium-sized businesses] will start to really think about their identities online, and privacy and passwords, and doing nothing won’t be an option for them anymore.
I’m more optimistic now than I was a year ago about the coming economy, partly because election years are usually fairly buoyant for the U.S. About half our business is in Europe, and our general forecast is for continued weakness for the euro zone versus the U.S., but stabilizing.
One concern is that security threats are so broad and varied, stemming from foreign governments to a lot of underground elements, that even though we think we have the right path, we need
to be on our toes.
BASED IN HORSHAM TOWNSHIP, PENNSYLVANIA, THE LIFE-INSURANCE PROVIDER REPORTED $1.5 BILLION IN 2014 REVENUE FROM INSURANCE OPERATIONS.
We see great opportunity for continued momentum, outpacing the industry for the seventh consecutive year. As others have sought out global opportunities, we have remained a domestic player. We’re keenly focused on the demographic shifts in the U.S., including the fact that we are staring at the first generation that is going to be primarily responsible for funding their own retirement.
There continues to be opportunity in the U.S. economy. Growth will be slow and there will be some knock-ons driven by the global impacts of China and other economies. The life insurance industry overall continues to recover from 2008.
We’re concerned that the advisor population in our industry is pushing an average of 50 years old, while the census age of the average worker is 37. So the industry has a huge gap of who we
employ in the advisor ranks; therefore we’re getting ahead of the curve in attracting millennial talent.
BASED IN NEW YORK CITY, THIS ENTERPRISE IS A $25 MILLION LEADER IN HELPING COMPANIES HARNESS CONTRACTORS AND CONTINGENT EMPLOYMENT.
We see increasing interest at even higher levels of Corporate America in different ways to get work done, so I think our industry will continue to see small growth. I think our company will continue to see strong growth, and we’re looking to partner in a deeper way with our clients.
I think the economy will be more of the same: steady progress, but not anything that’s going to blow anybody away. I don’t think it will be negative in any serious way, but there will be a lot of volatility.
There’s a lot of change in China, and Europe is a mixed bag. But I’m not foreseeing anything dramatic one way or another.
The legal framework in the U.S. around employment law really concerns me. There is enormous uncertainty and confusion around that; and with presidential politics getting into the issue; it’s even less likely to have resolution anytime soon.
HEADQUARTERED IN CHICAGO, THE $1.3 BILLION COMPANY PROVIDES CREDIT INFORMATION AND SERVICES AND FILED FOR AN IPO IN 2015.
We are positioned to grow in the U.S. and internationally, given the investments we’ve made in our technology, allowing us to put new solutions in the market for financial institutions, healthcare, insurance and government.
In the U.S. and internationally, things will go up and down; TransUnion is very well positioned regardless. People make decisions about how they do business in any economy. And if times are
tough, people manage their assets more carefully.
Some emerging markets are particularly promising, such as India, where the prime minister is trying to build the middle class—and in virtually every economy that requires a good credit-reporting system. We own the largest credit bureau in India.
I do worry about talent. Our effectiveness is really all about our people. We need to maintain and attract people who understand the technologies but also those who understand our customer
base and are deeply passionate about those verticals.
HEADQUARTERED IN CHESTER, PENNSYLVANIA, THE COMPANY IS AMERICA’S SECOND-LARGEST EXTERIOR HOME REMODELER AND POSTED ABOUT $310 MILLION IN 2014 REVENUES.
The recession was a real shock to the entire nation, but confidence is coming back. We don’t anticipate huge growth, but consistent growth like we’ve seen the last two or three years will continue.
The building and home-remodeling industry nationwide will continue to have slow, consistent increases. There is a direct correlation between increased home values and people feeling
comfortable reinvesting in their homes, coupled with increased access to capital.
Our biggest growth years have come during recessions, but we’re expecting really big things now because the industry is on the rise. We’ve also been focused on leadership development. Our
five-year growth plan is to open in 15 more markets. As the economy is coming back, there are some pretty big labor shortages, and some raw materials, such as glass, are difficult to come by. Making sure everything is coming back on all cylinders is the tricky part.
THE COMPANY, HEADQUARTERED IN DETROIT, IS A $1.5 BILLION PROVIDER OF TRANSPORTATION, LOGISTICS AND COMPONENTS TO AUTO COMPANIES.
I foresee nothing but a positive upside. There is tremendous growth in the auto industry still. The economy is sputtering, but gaining. We’ve benefited from fast growth in the auto industry.
We have also gained from the big drop in gasoline and diesel prices, plus the oil-price decline has benefited vehicles for which we manufacture parts.
The slight bubbles in China have been exposed, but we’ve managed through it, and I don’t think that’s ultimately going to impact U.S. consumer confidence.
But for business and the U.S. in general, there is a big imbalance in the lack of manufacturing talent and skilled trades throughout the country. It’s to the point where the average age of a truck driver is 61, and the average age of a manufacturing worker is 56. By 2025, we’ll have a 2.5-million-person gap if it’s not addressed, and that’s a concern in every industry.
HEADQUARTERED IN SAN DIEGO, THE $1-BILLION COMPANY IS AMERICA’S LARGEST PROVIDER OF HEALTHCARE-STAFFING SERVICES.
The Affordable Care Act will continue to add more patients to the system. And the general population is getting older, which means they’ll be utilizing more healthcare services. Add to that the general perception that the economy is improving and relatively stable, which means people have more money in their pocket to pay co-pays and for elective services.
There’s also massive consolidation across the healthcare industry. I see this transformation continuing, which creates opportunities for us to continue to deliver new and innovative services to help clients manage their workforces in effective ways.
The problem is that we don’t have enough clinicians to keep up with the growing number of jobs. That will be a challenge not just next year but for the next several years. An additional layer is that the population of clinicians is aging as well; currently, the typical retirement age for nurses is the early 50s, and not enough new ones are coming in.
THE U.S. ARM OF THE 21-BILLION-EURO NETHERLANDS-BASED PROVIDER OF ELECTRONIC GOODS AND SERVICES IS HEADQUARTERED IN ANDOVER, MASSACHUSETTS.
We’re combining our consumer and healthcare businesses in North America into a joint portfolio, based on the changes we see around how healthcare and wellness are being approached. We see large healthcare customers—integrated delivery networks—trying to structure themselves along these lines, so this creates a great opportunity.
The economy looks to have a stable and improving outlook for the businesses we serve. And what can’t be missed is the aging population in North America and, with that, increased need for healthcare technology and services—which create new opportunities for new innovations and solutions.
We announced this year a $500 million, 15-year contract with the Westchester [New York] Medical Center, for instance. We’re concerned about the outcome of the elections and the healthcare issue, such as the Republican candidates’ stands on the Affordable Care Act. Any major policy change could create a big ripple effect and create changes in the markets we serve.
THIS PRIVATELY HELD, MID-MARKET COMPANY IS A LEADING ONLINE AUTOMOTIVE-INFORMATION PORTAL HEADQUARTERED IN SANTA MONICA, CALIFORNIA.
We are a pretty good barometer of where the car market is, and we just had 20 million shoppers coming to our site in a month, which is an all-time high. That’s a reflection of where the category is and where we are as well.
The fundamentals of our market continue to be strong. Low gasoline prices work to spur the good old internal-combustion engine, where the technology has gotten better and better. Also, credit continues to be readily available; interest rates are still at historic lows. And production is in line with demand; incentives haven’t gone crazy.
Overall, I’m concerned about any black swans in the overall economy. But our biggest challenge comes down to execution: We’ve got a lot on our plate, and it’s ours to lose. We need to take the share and the market that we believe we can achieve. Our biggest obstacle is hiring all the people we need to execute our plans.
OPERATOR OF 47 SHOPPING CENTERS ACROSS THE U.S. AND CANADA, THIS GREENSBORO, NORTH CAROLINA-BASED REIT HAD 2014 REVENUES OF $419 MILLION.
We just completed a significant growth spurt that increased the size of our footprint by 7% in 2014 and 10% in 2015, and we’re building our 48th shopping center. Now we plan to build another one or two new centers in each of the next two to three years.
But we don’t see the robust demand out there to continue to grow at 10% a year, because consumers are being cautious. We want to see how they react in an environment of increasing interest rates.
You’re starting to see some small wage increases, which is good for the economy. I see continued GDP growth of 2 percent to 2.5% as reasonable and consistent. We’re not overly concerned about the growth of e-commerce. We’ve learned to offer the consumer what they love: the experience of going into stores and touching items and putting them on.
CREATED IN 2013 BY BAIN CAPITAL, THE $3-BILLION GROUP BASED IN NEWTOWN SQUARE, PENNSYLVANIA, INCLUDES APPLE VACATIONS, AMRESORTS AND OTHERS.
WE SEE A VERY STRONG 2016 in our space, particularly tourists coming from the U.S. to our region, which is the Caribbean and Mexico. More Americans are traveling out of the country for the first time, and these trips are more a part of life rather than unique, like a honeymoon.
Plus, luxury spending is up in general, and our hotels are mainly five-star. Also, the lower price of fuel is helping prices overall. We’ll open about 10 new hotels in 2016. We’re growing in bookings by about 30% over 2015 levels, so we see enough new demand. We also have more Europeans coming to our hotels, looking for new beaches because of the unrest and migration in north and eastern Africa.
But there is tremendous competition in the United States: Cruise lines are growing and doing a better job of putting bigger, cheaper, better ships in the water.
HEADQUARTERED IN FOUNTAIN VALLEY, CALIFORNIA, THE COMPANY IS THE U.S. ARM OF THE $84.7 BILLION HYUNDAI CHAEBOL HEADQUARTERED IN SEOUL.
This is a product business, so we feel great: We’ve got a bunch of new products coming out over the next 12 months, including in the SUV category where we’ve lacked enough products in the past. We’ve been mostly a sedan company.
Overall, you have to be bullish on the economy. Look at the macro indicators: oil prices, jobs, Fed actions, housing—they’re all very stable and going in the right direction. And so much of what
drives the economy is related to the automotive business.
There are two big uncertainties. One is the timing of the Fed’s interest-rate actions, which is dictated by global activity more than anything else. They affect our business a lot in terms of affordability, and manufacturers and dealers don’t have a lot of capability to offset the increased costs of funds. Also, the troubles in China, Brazil, Russia and Europe all are coming at the same time.
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