Top CEOs less optimistic about economy but plan more hiring
The nation’s top corporate chief executives were slightly less optimistic about the economy’s direction and planned to decrease investments in their businesses over the next six months, according to a survey released Tuesday.
Still, the CEOs said they also expected to boost hiring, although that came after a sharp drop in those plans in the third quarter.
The Business Roundtable’s economic outlook index fell to 85.1 from 86.4 in the third quarter, the trade group said.
It was the second straight quarterly decline for the index, which is a composite measure of the plans of CEOs for sales, capital spending and hiring.
The index ranges from -50 to 150, with a reading above 50 indicating the economy is expanding. The long-term average has been 80.3.
“The economy ended the year essentially where it started, performing below its potential,” said AT&T Inc. CEO Randall Stephenson, the group’s chairman.
The 129 CEOs surveyed said they expected the economy to expand about 2.4% next year, the same as they expected for this year.
Growth so far this year is averaging about 2.1%, but that figure was dragged down by a sharp first-quarter contraction.
Just 36% of executives said they planned to increase capital spending in the next six months, down from 39% in the third quarter, the survey said. And 13% said they planned to decrease spending, up from 10% in the third quarter.
Capital investments by businesses is key to economic growth and overhauling the corporate tax code would help boost that spending, Stephenson said.
“Our CEOs identified U.S. tax policy as the most significant barrier to more investment,” Stephenson said.
The Business Roundtable is pushing for the corporate tax rate to be lowered. The U.S. rate is 35%, the highest of any advanced economy.
The group wants that reduced to 25% and is ready to back the elimination of some corporate tax breaks to get the rate lowered, Stephenson said.
Republicans and Democrats generally agree the corporate tax rate should be lowered, but how far and with what trade-offs are the subject of sharp debate.
Another Business Roundtable priority is for Congress to grant the president so-called Trade Promotion Authority, which would make it easier to negotiate and approve trade deals, Stephenson said.
Despite the economic concerns, 40% of CEOs said they planned to increase employment at their businesses over the next six months, the survey found. That was up from 34% in the third quarter.
But the fourth-quarter figure was below the 43% who said they planned to boost hiring in the second-quarter survey.
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