CARY, N.C. — More business leaders want the Federal Reserve to dismantle credit market support and head off inflationary pressures, according to an influential survey released Thursday.
The Business Council said almost half of the surveyed chief executives said it was time for the Fed to unwind despite many members being less optimistic than financial markets about prospects for a "quick rebound."
The Council, based in Washington, is an invitation-only grouping of more than 100 chief executives currently chaired by Jim Owens, chairman and chief executive of Caterpillar Inc.
"It appears that sentiment concerning the business climate is changing from the negative to the positive," said Jamie Dimon, chairman and chief executive of JP Morgan Chase and vice-chairman of the Business Council.
Dimon's remarks, in a statement accompanying its survey, were tempered by his comment that many executives remained "cautious when it comes to taking action."
The Council surveyed 115 chief executives in September on a range of business and regulatory issues.
"In May, just 15% of respondents supported unwinding credit market support," Dimon said. "Today, that number is 46%."
The Fed's unprecedented move to provide liquidity for frozen credit markets beginning in late 2008 have raised concerns that the central bank is potentially stoking inflation now that the worst of credit crisis has passed.
Sentiment among chief executives increasingly reflects improving outlooks for the economy and their own companies.
Nearly 63% of the respondents said business conditions in their companies' industry sectors are improving, compared with 27% in the May survey.
The majority of respondents seeing improvement, however, described it as "moderately" rather than "substantially" better. Just 6% of the respondents said conditions are worsening, versus 18% in May.
Pockets of weakness remain. The Council said a significant number of executives in manufacturing, energy, retail and the medical and pharmaceutical sector indicated that conditions have worsened in recent months.
Executives expect sluggish economic growth in the coming months, with 64% forecasting U.S. gross domestic product to grow by 2% or less during the first six months of 2010.
As a result, more than 40% expect the fed-funds rate to hover at 0.51% to 1%. Almost half of the respondents expect unemployment to range from 9.6% to 10% early next year, while 26% see unemployment growing to 10.1% to 10.5%.
The Business Council meeting at a North Carolina resort is focused on energy issues.
The survey results were mixed on the use of market-based approaches to address energy usage, carbon emissions reduction and climate change. Thirty-eight percent of the respondents agreed, 34% disagreed and 28% were neutral.
