Chief executives at the largest U.S. companies are more optimistic about the state of the economy, and their outlook for sales over the next six months is the best in three years, according to a new survey.
Expectations for capital spending and hiring also increased, according to the quarterly findings released Tuesday by the Business Roundtable, a trade association of CEOs at major corporations.
FOR THE RECORD:
11:43 a.m.: A previous version of this article stated that the Business Roundtable survey was released Monday. It was released Tuesday.
“The U.S. economy and the job outlook are starting the year in a stronger position than 2014,” said AT&T Inc. Chief Executive Randall Stephenson, the group's chairman.
Expectations for economic growth this year improved to 2.8%, up 0.4 percentage points from the fourth-quarter survey. But Stephenson said the economy still was performing below its potential.
The survey's overall index rose to 90.8 in the first quarter of the year from 85.1 in the fourth quarter of 2014. The index’s long-term average is 80.5 within its range of 150 to negative 50.
It dropped to negative 0.5 at the depths of the Great Recession and has reached as high as 113 during the recovery.
Eight in 10 survey respondents said they expected their company's sales to increase over the next six months, up from 74% in the fourth-quarter survey. The figure, which had declined in the two previous quarters, was the best since 2012.
The group's hiring index also increased slightly.
And the biggest change was in expectations on capital spending over the next six months, with about 45% of respondents saying they planned to increase spending. The figure was 36% in the fourth quarter.
Chief executives were persuaded to open their corporate checkbooks wider partly by the December vote in Congress for a one-year extension of $45 billion in tax breaks, mostly for businesses, that had expired at the end of 2013, Stephenson said.
The survey results showed that a “wave of capital investment” would come if the White House and Congress could agree on business tax reform that would lower the overall U.S. corporate rate, he said.
“There is probably nothing that will move this economy forward and drive capital investment faster than tax reform,” Stephenson said.
Another top priority of the group is getting Congress to pass new authority for the president to fast-track trade deals.
The White House and Republican congressional leaders support so-called trade promotion authority, but many of President Obama's fellow Democrats oppose it out of concern new deals will lure U.S. jobs abroad.
“We expect, and will be pushing to get, something done in the first half of the year,” Stephenson said.
The first-quarter survey asked a special question about trade and found that increased access to foreign markets would boost corporate growth and U.S. hiring.
Stephenson had hoped the House already would be considering a trade promotion authority bill, but said “a lot of other noise has gotten in the way of that.”
One of the issues causing that noise has been the dispute over Department of Homeland Security funding.
The failure of the Republican-controlled Congress last week to pass a longer-term funding bill because of a dispute over Obama's immigration initiative was “disappointing,” Stephenson said.
“From our view, the only responsible action for a governing majority is to pass a full DHS funding bill,” he said.
Later Tuesday, the House passed a Senate-approved bill funding the agency through the end of the fiscal year, Sept. 30, without restricting the immigration plan.
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