CEOs lower out­look for eco­nomic growth

Los Angeles Times - - BUSINESS BEAT - By Jim Puz­zanghera jim.puz­zanghera@la­times.com

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.

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