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CEOs: Economy Still Performing Below Its Potential
Trans-Pacific Trade Deal Would Boost Economic Momentum
CEO Economic Outlook
Washington — For the fourth quarter in a row, CEO expectations on the economy remain mixed, indicating an economy performing below its potential, according to the Business Roundtable first quarter 2016 CEO Economic Outlook Survey, released today.
The Business Roundtable CEO Economic Outlook Index — a composite of CEO projections for sales and plans for capital spending and hiring over the next six months — increased modestly from 67.5 in the fourth quarter of 2015 to 69.4 in the first quarter of 2016. The index remains near three-year lows.
CEO expectations for sales over the next six months increased by 8.5 points, and their plans for capital expenditures increased by 7.1 points, relative to last quarter. Hiring plans declined by nearly 10 points from last quarter.
In their second estimate of real GDP growth for 2016, CEOs expect 2.2 percent growth, down from their 2.4 percent estimate at the end of 2015.
In this quarter’s survey, CEOs were also asked how the enactment of the Trans-Pacific Partnership (TPP) would affect their companies. A majority of CEOs reported that the TPP agreement would have a positive effect on their ability to “grow my company and become more globally competitive” and to “expand U.S. operations.”
"Mixed expectations for near-term sales, investment, hiring and growth point to an economy that continues to lack momentum,” said Doug Oberhelman, Chairman and Chief Executive Officer of Caterpillar Inc. and Chairman of Business Roundtable. “These results only reinforce the need for Congress and the Administration to act this year to enact policies that boost job creation and economic growth, such as quickly ratifying the TPP, modernizing America’s outdated business tax system, and embracing a smart regulatory environment."
The survey’s key findings from this quarter and the fourth quarter of 2015 include:
First Quarter 2016 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 — increased modestly from 67.5 in the fourth quarter of 2015 to 69.4 in the first quarter of 2016. The long-term average of the Index is 79.9.
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 of 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 2016 survey was completed between February 10 and March 2, 2016. Responses were received from 141 member CEOs. The percentages in some categories may not equal 100 due to rounding. Results of this and all previous surveys can be found at www.brt.org/resources/ceo-survey.