U.S. CEOs aren’t very optimistic about the outlook for the economy early next year, pointing to national tax and trade policies that discourage corporate investment, a report says.
A measure of executives’ economic outlook fell to 85.1 in the current quarter, compared to 86.4 in the third quarter. The results from a survey of top business leaders by the lobbying group Business Roundtable. The group queried 129 CEOs about their expectations for the next six months of sales, capital spending and employment.
“The economy ended the year essentially where it started — performing below its potential,” said Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T (T).
The dim outlook was primarily due to lower expectations of business investment, and executives also cut their sales expectations. Over a third, 36%, forecast an increase in business spending, while 50% expected no change and 13% forecast a decline in investment.
Despite those concerns, many leaders still plan to increase hiring. Four out of every 10 CEOs expected to boost employee count while 36% planned for no change and 23% saw a decline in headcount. Executives’ overall hiring outlook increased 3.6 points compared to last quarter’s measure.
The gloomy investment outlook is primarily due to worries about what their tax burdens will be over the long term. Many companies are choosing to hold off on spending until there’s more clarity, said Stephenson.
A host of tax breaks are scheduled to expire, and Congress is debating whether or not to extend those benefits. Most tax breaks will continue through the end of the year, though it is unclear if lawmakers will extend those benefits into 2015, leaving businesses in limbo.