Despite positive recent economic trends, the latest Business Roundtable survey indicated that there is less confidence among many of the country’s CEOs about the future economic outlook than in previous quarters. A report on the survey’s findings attributes the dip in confidence to uncertainties about trade policy and overall global growth.
The Business Roundtable CEO Economic Outlook Index for the second quarter of 2019 showed a 5.7-point drop in the composite measure of CEO projections for sales, capital spending and hiring over the next six months. At 89.5, the second-quarter composite rating still was above the historical average of 82.6.
The indices included in the report are based on a range between (-50) and 150, with ratings of 50 or higher indicating an economic expansion and those below 50 indicating an economic contraction.
The composite index is based on three component indices – all of which dipped in the second quarter. Those components are:
- CEO plans for hiring – dropped 5.2 points to 75.2 (more than 15 points higher than the employment sub-index’s historical average of 58.3);
- Plans for capital investment – dropped 2.9 points to 88.1 (more than 10 points above the capital spending sub-index’s historical average of 76.5); and
- Expectations for sales – dropped 8.9 points to 105.1.
The CEOs surveyed collectively projected 2.6 percent growth for the year. Sixty-five percent said they expect to see sales growth over the next six months, down from 73 percent in the first quarter. Forty-one percent said they anticipate staffing increases.
“CEO plans for hiring and capital investment remain healthy, but uncertainty about U.S. trade policy, softening global growth conditions and inaction on other pressing public policy issues are a concern,” JPMorgan Chase & Co. Chairman and CEO Jamie Dimon said in a statement included in the report. “It is crucial for Congress and the administration to work together to enact policies that will encourage inclusive growth, innovation and opportunity in the United States. That includes investing in infrastructure and workforce training, reforming our immigration system and expanding free and fair trade. Business Roundtable members stand ready to collaborate on solutions that will benefit all Americans.”
Dimon serves as chairman of the Business Roundtable.
“The second quarter CEO survey was in the field during a turbulent few weeks for U.S. trade relations with China and Mexico,” Business Roundtable President and CEO Joshua Bolten said. “Business leaders are ready and eager to invest and hire in the United States. Yet, the uncertainty over trade policy is making it more difficult for companies to invest and operate confidently. The administration and Congress can remove trade uncertainty by working together on policies – such as enacting the USMCA – that will fortify U.S. trading relationships and expand international commerce for the benefit of America’s workers, families and communities.”