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Subscribe to RSSWhat do CEOs really think about the economy? John Engler, Business Roundtable president, breaks down the metrics on the recent Business Roundtable survey, and discusses what is worrying the nation's top business leaders.
A survey of chief executives shows fewer large U.S. companies plan to hire or boost spending in the next six months, reflecting a weaker U.S. economy.
The Business Roundtable says 36 percent of its CEO members plan to add workers over the next six months. That's down from 42 percent when the survey was last taken three months ago.
Jim McNerney, the group's chairman and CEO of The Boeing Co., blamed the dip in sentiment on "concern over increasingly persistent obstacles to a stronger recovery." Those include uncertainty over potential U.S. tax increases and spending cuts early next year and Europe's financial crisis.
Only 43 percent say they plan to step up spending on machinery, computers and other large goods, down from 48 percent. Most CEOs still expect sales to increase in the next six months.
Overall, the CEO Outlook survey index fell to 89.1 in the second quarter, down from 96.9 in the first three months of the year. Any reading above 50 indicates growth.
The gloomier outlook follows a sharp pullback in hiring over the past two months, which has raised concerns that the economy is slumping after a fast start. Job growth averaged only 73,000 in April and May, after average gains of 226,000 per month in the first three months of the year. The unemployment rate rose to 8.2 percent in May from 8.1 percent.
McNerney said that companies are delaying hiring, and even laying off workers, in anticipation of what many economists call the "fiscal cliff" that looms at the end of this year. Several large tax cuts are scheduled to expire and big spending cuts, including in defense, are set to take effect Jan. 1.
While President Barack Obama and lawmakers say they will delay the onset of the changes, McNerney said companies can't be sure. Last year, Congress and the White House agreed only at the last minute to raise the government's borrowing limit and stave off a possible default.
"We have yet to regain faith that the process will deal with it," McNerney said.
As a result, "we don't know how corporations, or individuals, or capital will be taxed," he said. "That is having an impact on the results you see here."
Boeing and many other aerospace companies with government contracts are holding back on hiring and are cutting jobs in anticipation of the spending cuts, he added.
Europe: The big worry
Europe's woes are of far more concern than slowing growth in China, McNerney said. About a quarter of U.S. exports go to Europe, Roundtable officials said.
"The European situation could decelerate quickly," McNerney told reporters on a conference call. "We hope it doesn't, but I think it has a greater possibility to decelerate quickly, whereas China is more a matter of having 6 percent growth as opposed to 9 percent growth for a while."
Europe's sovereign debt crisis stands as one of the greatest current risks to the world economy. While investors breathed a sigh of relief after this weekend's elections in Greece, which lowered the risk that the heavily indebted country would pull out of the euro currency bloc, concerns are now rising that Spain, the zone's fourth-largest economy, would need an international bailout.
Political deadlock in Washington ahead of the November elections also worries U.S. CEOs, particularly those in the defense industry bracing for $500 billion in automatic additional spending cuts later this year if Congress fails to reach an agreement on other savings and revenues.
That and uncertainty on how U.S. tax policies could change in the coming months has CEOs wary of hiring or committing to large new capital investments, McNerney said.
"Companies are holding back," he said.
CEOs cut their forecast of overall growth in the U.S. economy and now look for a 2.1 percent rise in gross domestic product, versus the 2.3 percent forecast in March.
The survey of 164 CEOs was conducted from May 17 through June 8. Business Roundtable member companies generate $6 trillion in annual revenues and employ more than 14 million people.
The Associated Press and Reuters contributed to this report.
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They did all agree however that they needed to get paid more.
I wonder if the know that without hiring, people don't have any money to buy stuff, thus the economy will continue to be flat. Have to hire first so people have money to buy whatever stuff they produce and to raise the tax income the country makes so the govt can buy stuff too.
Agreed, interesting to see if they will take their bonuses this year.....
Of course they will!
No, the first thing that needs to happen is for certain political leaders to stop threatening and punishing success and to remove obstacles to growth. Furthermore, the same logic could be reversed ... if lazy people would take jobs that ARE available instead of whining and waiting on permanent unemployment checks, this would begin a cycle that would lead to increased job openings. As long as there is unemployment and other welfare benefits that are essentially guaranteed into perpetuity, WE WILL NEVER get off of this economic dead end road we're on. Enabling and perpetuating a dependent class society CAN ONLY serve to REDUCE economic activity ... simple rule of economics. Funny, you want to berate the business owners, CEO's and others who can hire, then you turn around and want to rely on them for your well-being.
Reduce unemployment compensation benefits back to 6 months and reduce and enforce a "lifetime welfare benefits" policy and watch our economy take off and watch productivity, wages, and economic growth increase numbers reach double digit figures inside of 9 months.
Although I do agree Welfare should only be a 4 year "hand up" I also disagree that anyone is impeding job growth ( I assume with all the pesky safety regulations and such ). These CEOs are paid 100 times more than their counterparts a few decades ago.
The news and politicians always complain that consumer confidence and spending is down but guess what? Americans as a rule don't like to save. If you pay the CEOs less and give the workers a few dollars more they will spend like drunken sailors - I see it every year right after the tax refunds go out.
Why is it that no one can see that CEOs buy German cars, Italian shoes, and French wine but if you give money to the blue collar worker he will buy local products and stimulate the economy.
I really can't believe all these CEOs were given college degrees - did their parents dedicate a wing to the school or something?
Wait wait, I thought if we kept the Bush era tax cuts they'd have more incentive to hire? What happened to the trickle down effect? /endsarcasm
By the way, before anyone idiot screams "lazy liberal" I'm a first year college graduate working as a civil engineer. So yeah, I do have a job and I still feel this way.
As long as there is unemployment and other welfare benefits that are essentially guaranteed into perpetuity, WE WILL NEVER get off of this economic dead end road we're on. Enabling and perpetuating a dependent class society CAN ONLY serve to REDUCE economic activity ... simple rule of economics. Funny, you want to berate the business owners, CEO's and others who can hire, then you turn around and want to rely on them for your well-being.
Reduce unemployment compensation benefits back to 6 months and reduce and enforce a "lifetime welfare benefits" policy and watch our economy take off and watch productivity, wages, and economic growth increase numbers reach double digit figures inside of 9 months.
What's your education level, because frankly, there are so many holes in your argument. I agree that people shouldn't be dependent, but if CEOs aren't hiring, how does reducing unemployment compensation change the fact that they won't have a job to apply to? By the way, we're berating said CEOs because their Republican friends ared pushing to keep tax cuts AS AN INCENTIVE TO HIRE, and they aren't. So, free tax cuts.
I've taken economic courses, I have several friends that have a Master's in economics. Your reasoning doesn't make a lick of sense.
STexan,
You are totally without a clue. There are NO permanent unemployment checks. You have no idea what is really going on in this economy, tainted by your far right wing views. In your warped mind anyone who is out of work is a lazy scofflaw and that is utter nonsense.
CEO's of Corporate America have nothing to "fear but fear itself."
The private sector can create jobs faster than the government with efficient access to capital, but the
government has to ensure capital markets are worthy of the public's trust.
With more than $4 trillion in cash setting on the sidelines, including almost $2 trillion held by
corporations, it should come as a surprise to no one why the economy added only 69,000 jobs in May and unemployment grew to 8.2%. The fact is, Americans (including CEO's of Corporate America) no longer trust Wall Street, which reflects negatively on federal banking and market regulators tasked with
protecting investors.
Please sign the petition to the U.S. Senate Banking and House Financial Services Committee asking for improved oversight of federal banking and market regulators.
To read more about what we’re trying to do and to sign the petition, click here:
http://www.change.org/petitions/u-s-senate-banking-and-u-s-house-financial-services-committees-use-technology-to-provide-oversight-of-u-s-banking-and-market-regulators?share_id=HTpDoOQNJgpe=d2e
It'll just take a minute!
Well I am telling my boss not to hire anyone right now. I'd rather have the overtime. I told him that will save dough on bennies and cost of hiring someone. He likes my proposal. Call me what you want but I am not out for anyone else but myself and to grow my company. If we do not need anyone, it is what it is. The higher-ups in corporate America do not work together but they will do the same things. The first being(and this is something the liberals never pay any attention to), the rich supply the jobs. Their income never gets lower. Someone will be laid off before that happens. That is just part of business. So if you tax them, someone loses their jobs. The liberals are thinking they will uphold "social responsibility". That is a dream!!! Pay close attention to businesses leaving California for other states. The 2nd part is when the media says "RECESSION" and everyone hits the panic button, they all fall in line with layoffs. We live in a capitalist society. If you don't like it, go to China!
"I'm not out for anyone but myself" says it all. I'll bet you call yourself a Christian. You're pathetic. Don't give an unemployed person, who may lose their home, a job so I can get more. Shame on you!!!
People like you are the problem in this country today, and you're so self centered you don't see it.
The corporations that make up the Business Roundtable are only prolonging the recession through their actions. They are sitting on trillions yet they refuse to hire or increase the pay of the workers they currently have. It is all bull@!$%# since they practically own the government! These same CEOs that are worried about the 'fiscal cliff' are probably the same ones who advocate cutting government spending!
Why not? Are they taking their money with them! We should have been on a 3-day work week @ the current 5-day pay a long while ago and put everybody back to work! They want their cake & eat it too! It's time for them to give back! They have been stealing from the 99% American People long enough!
I think this Business Roundtable is made up of Government contractors. They're all waiting for their pet bills to be passed so they can have money for their fat cat selves.
As the latest CFO magazine notes, there is risk mitigation and then there is risk aversion, which these CEOs are engaging in. The sad fact is the short-term, avoid losses at all cost attitude of fear that U.S. CEOs have adopted in order to entrench their ridiculous pay packages has finally come home to roost. With over $2 trillion of cash parked on the sidelines and ridiculously low borrowing costs, now is exactly the time to be investing in new opportunities and hiring new workers. Instead, like the good little monopolistic oligarchs they have become, they will all move in lockstep with each other and do nothing while the BRIC countries invest, expand and grow richer.
Within a generation, the U.S. will be the equivalent of South Africa under apartheid - a few rich people well into decline, desperately trying to cling to a business model that has turned the rest into little more than serfs.
Listen chublidiot, you don't spend into the face of overregulation and the threat of looming massive taxation with safety nets turned into virtual HAMMOCKS by the libturds. Everyone is waiting for November.
The stock market will have its Santa Rally in November this year!
Bye Bye OBUmmer.
Jello heads
The CEO's are worried about big federal spending cuts. Interesting.
These CEOs are waiting and hoping Romney will be elected in November. Since Romney and the GOP have been purchased lock, stock and barrel by corporate america and the super rich (Edelson and Koch), we will go from a country with a strong middle class and a lower economic class with hope to one with those who have it all and those who beg for scraps.
This is Obama's fault.
Defeat Socialism this November!
Yep wait and see that OBummer and the tax and spend big government on the dole entitlements are curbed together with the oppressing regulation of business and the private sector.
Maybe the Hollywood pole smokers and butt pirates OBummer is courting donations from are hiring in the meantime.
Jello heads!
The stock market thrives on bad news for the little people.
50 years ago the CEO to Average worker pay was 30 to 1.... Today it's 400 to 1.
Incomes for the wealthiest 1 percent of Americans nearly tripled from 1979 to 2007, far outpacing income growth for all other groups, said a new report that underscored sharply increased U.S. income disparity. http://tinyurl.com/3vs8omr
Top War Contractors Among The Nation's Wealthiest
There's the top 1% of wealthy Americans (bankers, oil tycoons, hedge fund managers) and there's the top 0.01% of wealthy Americans: the military contractor CEOs. http://tinyurl.com/3ptzve7 (4,400 Americans died in Iraq for profit)
The GOP’s Intellectual Dishonesty Regarding Bush Tax Cuts
Republicans say that tax cuts for the wealthy must be extended to protect the economy and small businesses, even though neither would be affected by their lapse.
http://tinyurl.com/2cgltuc
VOTE GOP... THE RICH WILL THANK YOU (probably not)
The CEO of Boeing is obviously concerned about Defense spending. This subsidizes his company. Economist warned when this recession began that it would take many years to unwind due to the collapse of the world banking system. We are now seeing the European banks are on the edge. The EU should have instituted the same measures we did nearly 4 years ago and capitalized their banks. The obvious failure in the austerity measures that they instituted are obvious. Similar austerity measures in the U.S. on state and local levels have also taken a toll on employment and consumer spending. Let us not forget that 70% of the economic activity in the U.S. is consumer based spending. Consumer demand for goods and services is volatile because of a realization by the consumer that saving money and reducing personal debt is important, personal savings was 0 in 2007, and the lack of discretionary income is definitely holding the economy in check. There is no doubt that the economy is in much better shape than in 2009. Our economy is performing much stronger than most all other industrialized nations. Until the housing market is back on its feet, I would not expect much additional growth. Housing has always been the backbone of a thriving economy. The private sector has contributed about all they are going to contribute. Private sector GDP was up 3.5% in the first quarter but with little demand it will simply not be able to grow. This is complicated and you just can't reduce it to a bumper sticker as some would like. Politics is a big problem but any resolution on that front is very doubtful. There are too many signing too many pledges all of which will stifle growth.