The looming fiscal cliff and weaker demand in Europe and China have driven U.S. business leaders to their gloomiest outlook in three years, a survey released Wednesday showed.
Chief executives of leading U.S. companies have lowered their expectations for sales, capital spending and hiring for the next six months, the Business Roundtable said.
The business association's CEO Economic Outlook Survey Index plunged to 66.0 in the third quarter from 89.1 in the second quarter -- the lowest reading since the third quarter of 2009.
"The downshift in quarterly sentiment reflects continuing concern about the strength of the recovery, including uncertainty over the approaching fiscal cliff and accompanying debates about the tax code, sequestration and the debt ceiling," said Boeing (IW 500/16) CEO Jim McNerney, chairman of the Business Roundtable.
Growth Estimate for U.S. Economy Lowered
CEOs lowered their growth estimate for the U.S. economy, to 1.9% in 2012, down from 2.1% forecast in the April-June period.
The mood has dimmed considerably from the start of the year, when businesses saw the recovery picking up and more were planning to hire.
The survey of 138 CEOs, completed between Aug. 30 and Sept. 14, highlighted sharply escalating impatience with the political gridlock in Washington ahead of the Nov. 6 presidential and congressional election.
Businesses are further entrenching in the face of the uncertainty of tax regulations, the debt ceiling debate and the looming automatic tax increases and spending cuts at year-end, the so-called "fiscal cliff" expected to push the world's largest economy back into recession.
Europe's deepening debt and financial crisis, tipping the eurozone toward recession, and a slowdown in China, the global economy's growth driver, have added to the gloom.
Under these conditions, only 58% of CEOs expect sales to increase over the next six months, and just 30% foresee more capital spending.
The business leaders offered little hope for improvement in the ailing jobs market, where unemployment has been above 8% since last October.
One-third Expect Declining Employment
Those expecting employment to decline jumped to 34% from 20%, while only 29% think hiring will rise.
When the economy is growing so slowly, "you're not adding jobs," McNerney said in a conference call.
The survey results reflect "global demand flattening out, particularly in Europe and China, but also a number of domestic policy issues that could have a near-term negative impact on the economy and the business climate," he said, citing the debt ceiling debate and the fiscal cliff.
"The uncertainty attendant to it certainly is cold water on long-term planning."
Copyright Agence France-Presse, 2012