Big-company CEOs cautious about growth because of ‘fiscal cliff’
WASHINGTON -- Major corporate chief executives remain cautious about the economy’s growth and about their own spending and hiring plans because of the looming “fiscal cliff.â€
A quarterly survey by the Business Roundtable, released Wednesday, shows little change in the weak economic outlook of the group’s chief executives from the July-through-September period.
Expectations had already dropped sharply in the third quarter because of worries that Washington policymakers would fail to avert the fiscal cliff, triggering another recession next year.
The group’s CEO Economic Outlook Index dropped to 65.6 in the fourth quarter from 66 in the third quarter. The latest reading is the lowest since the third quarter of 2009.
Quiz: How much do you know about the ‘fiscal cliff’?
“The continued softness in quarterly sentiment reflects deep uncertainty about the future overall economic climate, realities of a slow-growing economy and frustration over Washington’s inability to resolve looming fiscal cliff issues,†said Boeing Co. Chief Executive Jim McNerney, chairman of the business group.
The fiscal cliff apparently is weighing much more on corporate executives than on most Americans. Poll data released Wednesday by Bloomberg News indicate that Americans are more optimistic about the economy’s direction than at any point since September 2009.
The Business Roundtable’s survey of 143 chief executives -- about two-thirds of the group’s membership, found slightly lower expectations for sales and capital spending over the next six months and slightly higher expectations for hiring.
Avoiding the fiscal cliff’s combination of large tax increases and spending cuts coming Jan. 1 is crucial to getting corporations to spend more on hiring and equipment, McNerney said.
The uncertainty surrounding the fiscal cliff “is putting a damper on investment,†McNerney said.
On Tuesday, the Business Roundtable publicly dropped its opposition to increases in income tax rates, a key sticking point in negotiations between President Obama and Republicans in Congress.
McNerney said CEOs understand a deal must spread around the pain.
“We’re advocating everybody give a little,†he said. “Everybody’s got to feel a little bit like they’re getting nailed, then we know we have a deal.â€
McNerney said he remains hopeful a deal will get done as talks have accelerated between Obama and House Speaker John Boehner in recent days.
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