CEOs lower outlook for economic growth
WASHINGTON — Chief executives at the largest U.S. corporations lowered their outlook for economic growth and planned less spending and hiring amid reduced expectations for sales during the next six months, according to a new survey.
The CEOs forecast the economy will expand 2.5% this year, down from the 2.8% estimate in the first quarter, according to the quarterly survey released Monday by the Business Roundtable trade association.
The group’s economic index declined to 81.3 from 90.8 in the first three months this year. The long-term average is 80.5, and the index can range from 150 to negative 50.
“These results are consistent with an economy that continues to operate well below its full potential,” said AT&T CEO Randall Stephenson, the group’s chairman.
The drop in the index was caused by a major decline in expectations for sales, hiring and capital spending.
Seven in 10 CEOs said they expected sales to increase in the next six months, down from 80% in the first quarter.
With less money coming in, the percentage of CEOs expecting to increase capital spending and hiring also fell.
Just 35% said they expected to boost spending, compared with 45% in the first quarter. And more CEOs said they would hold off on hiring additional employees — and even lay off some workers.
About 34% said they expected to increase their company’s U.S. employment, down from 40% in the first quarter. Meanwhile, 26% said they would reduce employment, up from 23% in the first quarter.
The survey of 128 CEOs was conducted from April 22 to May 13, before the Commerce Department reported that the economy contracted at a 0.7% annual rate in the first quarter.