CEOs' view of economy slips a tad amid cliff debate
U.S. chief executives' view of the domestic economy drifted down to a three-year low in the fourth quarter, with concerns about the fiscal cliff undermining their confidence, a Business Roundtable survey found.
The group's CEO Economic Outlook Index , released Wednesday, fell to 65.6 in the fourth quarter following a sharp drop to 66 in the third quarter. Any reading above 50 indicates forecast growth.
The decline shows corporate anxiety remains high a little more than two weeks before a year-end deadline for Democratic President Barack Obama and Republicans in Congress to reach a deal to avoid the "fiscal cliff" of year-end mandatory spending cuts and expiration of prior tax cuts.
Business groups argue that uncertainty about what their taxes will be is holding back decisions on hiring and capital spending, and contributing to the nation's sluggish recovery from a recession that ended more than three years ago.
"It's fair to say that we would be recovering faster if it were not for the political uncertainty that we're facing," said Boeing Co. CEO Jim McNerney, who serves as chairman of the Roundtable.
McNerney was one of 160 CEOs who sent a letter to President Barack Obama and Republican congressional leaders on Tuesday calling on them to reach a deal to prevent the economy from going over the fiscal cliff.
In a sign of how uncertain the outlook is, as many CEOs planned to add jobs in the U.S. as foresaw cuts.
Twenty-nine percent CEOs plan to add jobs in the U.S. in the next six months, with an equal percentage expecting to cut. Fewer CEOs said that they planned to cut jobs in the fourth quarter than had said so in the third quarter.
Thirty percent of CEOs expect to boost their U.S. capital spending in that time frame, and 58 percent expect their sales to rise. The percentage of CEOs who expected to cut their capital spending and who forecast sales declines rose.
CEOs expect U.S. real gross domestic product to rise 2 percent in 2013, a slight improvement from their 1.9 percent prior expectation in the third quarter.
While there was little change, the results reflected an environment of continued economic uncertainty. CEOs have warned the uncertainty is taking a toll on sales growth.
"There has been some impact in the market as a result of the uncertainty that's out there generally in the economy and certainly accentuated by all of the indecision that we see in Washington right now," said 3M Co. Chief Financial Officer David Meline. "It has slowed the business."
The diversified U.S. manufacturer earlier on Wednesday laid out its 2013 sales growth targets, which were below its long-term goals.
The Roundtable surveyed 143 CEOs from Nov. 12 through Nov. 30.