Many investors, market strategists and economists are becoming increasingly pessimistic about the outlook for future economic growth, both in the U.S. and across the globe. But a significant number of CEOs and other top executives who lead America's biggest corporations have a more positive, if not outright bullish, view. They expect strong global growth to persist, and even those who are skeptical anticipate that, when the slowdown comes, it will be manageable, according to a quarterly report by Goldman Sachs. The table below is a sampling of 8 companies' views on the economy, followed by more analysis.

What Corporate America Is Saying

United Technologies: "Very strong" end markets; forecasting strong global growth through 2019
Estee Lauder: Seeing no slowdown; sales "accelerating" in China
Fortune Brands: Looks like a temporary "pause" rather than a slowdown
Mastercard: "Solid overall growth" but monitoring 4 potential risks, including rising dollar
Coca-Cola: Global economy still growing, but "volatile"
Union Pacific: Few indicators of global slowdown, but "plenty of risk" from tariffs in particular
Digital Realty Trust: Global expansion "remains intact" but "global trade war" is a big risk
JPMorgan Chase: "Still quite optimistic on the global economy"

Source: Goldman Sachs

Significance For Investors

Goldman examined transcripts of third quarter 2018 earnings conference calls held by companies in the S&P 500 Index (SPX), and looked for commentary on three main themes: the tightening labor market, trade conflict between the U.S. and China, and increasing concerns that global economic growth either is slowing down or is likely to do so in the near future. The report includes excerpts from 51 companies. 

Regarding corporate comments on economic growth, Goldman finds that, on the whole, "corporate executives acknowledged the slowing pace of global growth, but most believe the outlook is not as dim as equity market volatility suggests." Additionally, the report notes that, even among those executives who see a slowdown underway, "few expressed concerns about a substantial further deceleration." However, most of those quoted, even the optimistic executives, have some serious worries, as summarized in the table below.

Risk Still Exists For U.S. Companies

Rising labor costs
Trade war between the U.S. and China
Appreciating U.S. dollar
Interest rate hikes by the Federal Reserve
Volatile world economies
Economic slowdown in Europe

Source: Goldman Sachs

Fortune Brands Home & Security Inc. (FBHS) is a maker of home fixtures and hardware, whose brands include Master Lock, Sentry Safe, MasterBrand cabinets, and Moen faucets, among others. They said: "It feels like a slowdown, but it's more of a pause, maybe similar to the summer of 2014...there was an interest rate pop and it settled back and set up a pretty good 2015."

Digital Realty Trust Inc. (DLR) is a REIT that owns data centers. They said: "global economic expansion remains intact. Although, we are mindful of the risk of a global trade war which does have the potential to disrupt the broad-based economic growth."

United Technologies Corp. (UTX) is an industrial conglomerate whose best-known product lines are Otis elevators and Pratt & Whitney jet engines. While they report having "end markets" that are "very strong," and forecast strong global growth through the end of 2019, they add, "it's the geopolitical environment that is our biggest concern."

JPMorgan Chase & Co. (JPM), is the largest U.S.-based bank in terms of assets. While they are "still quite optimistic on the global economy," and "don't see it slowing down," they recognize that "there's a lot of macro uncertainty and overhang noise that have been affecting the markets."

At the pessimistic end of the spectrum is The Sherwin-Williams Co. (SHW), a leading manufacturer of paints and coatings. They said: "You've seen it in the business press over the past month or two, an increasing number of stories suggesting that the peak of this economic expansion may be behind us. And it's not hard to find evidence in the form of economic data to support this thesis."

Hotel developer, operator and franchisor Hilton Worldwide Holdings Inc. (HLT) said "it does appear that China's economy is slowing down." While they see growth "maybe a tick higher in the U.S.," it's "a bit lower" in Asia and Europe.

Looking Ahead

While corporate executives may be generally optimistic about continued economic growth, investors who paid big premiums for "perfectly priced" stocks still have reasons to worry. The slightest indication of an economic slowdown, let alone a recession, is likely to send equity prices tumbling.