Reading time ( words)
CEOs are cautious about the U.S. economy’s near-term prospects and are trimming business plans for capital investment over the next six months, according to the Business Roundtable third quarter 2015 CEO Economic Outlook Survey, released today.
The Business Roundtable CEO Economic Outlook Index – a composite of CEO projections for sales and plans for capital spending and hiring over the next six months – declined 7.2 points, from 81.3 in the second quarter of 2015 to 74.1 in the third quarter.
CEOs now expect GDP growth of 2.4 percent in 2015, a 0.1 percentage point decline from last quarter’s projection. CEO expectations for sales and hiring for the next six months decreased by 11.1 and 7.9 points, respectively. Expectations for capital spending slipped by a more modest 2.4 points, its second consecutive decline.
“The downward trend in CEO plans for investment and hiring continues to reflect reasonable caution regarding near-term prospects for modest U.S. growth,” said Randall Stephenson, Chairman of Business Roundtable and Chairman and CEO of AT&T Inc. Stephenson noted that business plans could be negatively affected if Washington fails to act on federal budgets, the debt ceiling and tax extenders.
“Predictability is critical to spur investment and unlock economic expansion and job growth,” Stephenson said. “Congress and the Administration need to work together to pass a prudent spending plan and renew expired tax provisions. U.S. workers cannot afford the instability that comes with inaction.”
Third Quarter 2015 Business Roundtable CEO Economic Outlook Index
The Business Roundtable CEO Economic Outlook Index – a composite index of CEO plans for the next six months of sales, capital spending and employment – declined from 81.3 in the second quarter of 2015 to 74.1 in the third quarter of 2015. The long-term average of the Index is 80.4.
About the Business Roundtable CEO Economic Outlook Survey
The Business Roundtable CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economy by Business Roundtable member CEOs. The survey is designed to provide a picture of the future direction of the U.S. economy by asking CEOs to report their plans for their company’s sales, capex and employment in the next six months. The data are used to create the Business Roundtable CEO Economic Outlook Index and sub-indices for sales, capex and hiring expectations – diffusion indices that range between -50 and 150 – where readings at 50 or above indicate an economic expansion, and readings below 50 indicate an economic contraction. A diffusion index is defined as the percentage of respondents who report that a measure will increase minus the percentage who report that the measure will decrease.