What 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.
By msnbc.com news services
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.
More money and business news:
Follow msnbc.com business on Twitter and Facebook?
?
chris harrison girl scouts printable bracket army wives khan academy game change own
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.