How long can small to mid-sized businesses count on this economic gravy train? Well, things will slow a bit in 1999, a new study suggests.

Chief executive officers at a group of fast-growing companies see prices falling, and margins getting squeezed in the first quarter of 1999, according to the American Business Conference, which conducts a quarterly survey of chief executives from its 100 member firms. At the end of every quarter, ABC asks the companies, which have revenues between $25 million and $2 billion, to predict outcomes for things like product pricing, wages, sales, and margins in the quarter ahead.

A net 52% foresee an increase in sales and shipments in early 1999. That compares to a net 34% who expected an increase in the fourth quarter of 1998. (A net percentage subtracts the number that foresee an increase from the number that foresee a decrease.) At the same time, a net 69% said they will pay higher wages for employees in the first quarter of 1999, compared to a net 48% who said they would in the fourth quarter.

Yet, the higher sales volumes won't necessarily translate to a big jump in revenues. A net 10% foresee lower prices in their sectors, compared to a net 4% who predicted lower prices in the fourth quarter. "You are in an extraordinarily competitive environment. In the short term, [businesses] are working their current resources hard. They are paying their labor force, but it better be productivity-driven," says ABC president Barry Rogstad. "The extent to which it isn't, you are going to have some diminution of margins."

The cold winds of recession -- which many steeled themselves against after the summer's stock market plunge -- don't seem about to materialize. But, this all points to slower growth in the coming year, Rogstad says. He adds businesses are "very tentative" as they look ahead to the rest of 1999.

By Jeremy Quittner in New York
Jeremy_Quittner@businessweek.com