Modest Uptick in Business Optimism, Especially for Investment, but Still Below Economy’s Full Potential
CEOs say Congressional Action on Trade Would Boost U.S. Jobs, Competitiveness, Economic Growth
CEO Economic Outlook
Washington – The Business Roundtable released its first quarter 2015 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. The overall Index is up from the fourth quarter of 2014, but has been in the same general range for the past year and a half. The six-month outlook for sales hit a three-year high this quarter.
CEOs said they expect 2015 gross domestic product (GDP) growth of 2.8 percent, slightly below consensus estimates, but a 0.4 percentage point increase over their projection from the fourth quarter of 2014.
“The U.S. economy and the job outlook are starting the year in a stronger position than 2014. Almost half of CEOs plan to increase capital spending in the next six months, which shows that passage of tax-extender legislation late last year gave some companies greater confidence to invest more in the United States,“ said Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T Inc. “But we need to give more businesses the confidence to increase investment to create more good-paying, middle-class jobs and boost U.S. economic growth. That would happen if Congress and the Administration pass Trade Promotion Authority, as well as act on business tax reform, infrastructure investment and smart regulation that encourage and accelerate business investment.”
CEO expectations for sales, investment and hiring increased 7.4 points, 9.2 points and 0.4 points, respectively. The survey’s key findings from this quarter and the fourth quarter of 2014 include:
First Quarter 2015 Business Roundtable CEO Economic Outlook Index
The Business Roundtable CEO Economic Outlook Index – a composite index of CEO plans for the next six months of sales, capital spending and employment – rebounded in the first quarter of 2015 to 90.8 from 85.1 in the fourth quarter of 2014. The long-term average of the Index is 80.5.
The CEOs’ response to a special question on the benefits of more trade opportunities clearly indicates that increased international trade would result in more U.S. hiring.
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 first quarter 2015 survey was completed between Jan. 26 and Feb. 13, 2015. Responses were received from 120 member CEOs, 59 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.