Some 79% of the United States' top CEOs expect their company's sales to increase in the next six months, according to the second quarter CEO Economic Outlook Survey released by the Business Roundtable June 23. The group also indicated an increase in employment, with the number expecting to hire in the coming months increasing from 29% last quarter to 39% this quarter.
But the new survey showed a slight pullback on capital spending, with 43% compared to 47% last quarter saying they will increase their capital spending in the United States and 50% expecting no change over the next six months. An independent study of the index showed that is has predictive power for forecasting GDP growth in both the quarter in which it is released and the next two quarters.
Ivan Seidenberg, chairman of the Business Roundtable and CEO of Verizon Communications, said U.S. tax policies and regulations were having a "dampening effect" on the rate of improvement of the economy and causing company leaders to be more cautious about spending. Seidenberg and John Castellani, president of the Business Roundtable, said concerns about the European economy were not mentioned by members as a reason for caution in their investment plans. Castellani added that members expecting the highest rates of growth are participating in rapidly growing economies such as China, India and Brazil.
In a June 22 speech to the Economic Club of Washington, Seidenberg said the Business Roundtable had become "somewhat troubled by a growing disconnect between Washington and the business community that is harming our ability to expand the economy and grow private-sector jobs in the U.S." In particular, he pointed to concerns about the U.S. corporate tax rate, financial reform proposals on derivatives and proxy access, and inaction on pending trade agreements with Colombia, Panama and South Korea.
The Business Roundtable CEO Economic Outlook Survey Index expanded to 94.6, compared to 88.9 in the first quarter of 2010 and 18.5 in the second quarter of 2009. A number of 50 or more indicates economic expansion.