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CEOs Forecast Weak Economic Growth in 2015
CEOs Say Congressional Action on Tax Extenders and Trade Promotion Authority Critical to Spur Investment, Improve Economic Outlook
CEO Economic Outlook
Washington – The Business Roundtable fourth quarter 2014 CEO Economic Outlook Index ‒ which provides a picture of the future direction of the U.S. economy based upon CEOs’ plans for sales, capital spending and hiring ‒ declined moderately from the third quarter, with capital spending declining the most.
CEOs were also asked to identify the two most significant factors holding back increased U.S. investment spending. In response, CEOs said that U.S. tax policy and regulatory issues are limiting U.S. investment spending.
"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 Inc. "Congress and the Administration should act now on tax extenders and Trade Promotion Authority to encourage additional business investment in the United States to help the economy grow and create more jobs."
CEOs said they expect 2015 gross domestic product growth of 2.4 percent, unchanged from their 2014 expectation.
CEO Expectations for investment and sales declined 5.8 points and 1.3 points, respectively. Plans for hiring increased 3.6 points following last quarter's 15.7 point decline. The survey's key findings from this quarter and the third quarter of 2014 include:
Fourth Quarter 2014 Business Roundtable CEO Economic Outlook Index
The Business Roundtable CEO Economic Outlook Index – a composite index of CEO expectations for the next six months of sales, capital spending and employment – decreased moderately in the fourth quarter of 2014 to 85.1 from 86.4 in the third quarter of 2014. The long-term average of the Index is 80.3.
Responses to Special Questions Asked This Quarter
In a question posed annually each fourth quarter, 39 percent of CEOs reported that regulatory costs were the top cost pressure facing their business over the next six months, followed by labor and health care costs. Regulatory costs were also the CEOs' top concern in the fourth quarter of 2013 and 2012.
About the Business Roundtable CEO Economic Outlook Survey
The Business Roundtable CEO Economic Outlook Survey, conducted quarterly since the fourth quarter of 2002, provides a forward-looking view of the economy by Business Roundtable member CEOs. The survey is designed to provide a picture about the future direction of the U.S. economy by asking CEOs to report their plans for their company’s sales, capex and employment in the next six months. The data are used to create the Business Roundtable CEO Economic Outlook Index and sub-indices for sales, capex and hiring expectations – diffusion indices that range between -50 and 150 – where readings at 50 or above indicate an economic expansion, and readings below 50 indicate an economic contraction. A diffusion index is defined as the percentage of respondents who report that a measure will increase minus the percentage who report that the measure will decrease.
The fourth quarter 2014 survey was completed between October 22 and November 12, 2014. Responses were received from 129 member CEOs, 63 percent of the total Business Roundtable membership. The percentages in some categories may not equal 100 due to rounding. Results of this and all previous surveys can be found at http://www.brt.org/resources/ceo-survey.