WASHINGTON—U.S. businesses are increasingly pessimistic about the U.S. economy and are slashing plans for investment that is vital for growth, a private survey showed Tuesday.
The Business Roundtable, a group of top corporate leaders, said its fourth-quarter survey found chief executives voicing "growing caution" about the near-term economic outlook.
Its CEO Economic Outlook Index, grouping sales projections and plans for investment and hiring, dropped 6.6 points from the third quarter to 67.5 in the fourth quarter.
That was the third straight quarterly decline for the index, which measures CEOs' expectations for the coming six months.
“Lower expectations for sales and investment reflect CEOs' ongoing caution about the near-term prospects for US economic growth," said Randall Stephenson, chairman of Business Roundtable, and the chairman and chief executive of telecom giant AT&T.
"Congress and the administration need to work together to continue to fund the government, expand trade, agree on a long-term transportation infrastructure investment plan, reauthorize the US Export-Import Bank and renew expired tax provisions," he said in a statement.
The fourth-quarter decline in the index was led by plans for capital spending, such as investments in equipment and property, which plummeted nearly 17 points quarter-over-quarter to 53.6.
"The sharp drop in capital spending is alarming," Stephenson said in a conference call with reporters. Businesses are reluctant to invest when the U.S. tax code is "uncompetitive" and the highest in the 34-country OECD, he said.
In the fourth quarter, he said, businesses were particularly hampered by the uncertainty of whether certain tax provisions, such as bonus depreciation and a research and development tax credit, would be renewed at the end of the year.
Sales expectations weakened while plans for hiring were essentially unchanged from the third quarter, when they fell almost eight points, according to the survey.
Regulation continued to be a particular concern of the members of the Business Roundtable, which includes companies that make up more than a quarter of the value of the US stock market--including Wal-Mart, ExxonMobil, Caterpillar and Bank of America.
Respondents to the survey "once again" cited regulation as their top business cost pressure, ahead of labor and health care costs.
Stephenson called on the Obama administration to address regulation costs, noting they did not require congressional action.
"It appears Congress is moving" on some business-friendly issues, like tax extenders and a multi-year transportation bill that would include reauthorization of the Export-Import Bank, he said.
Funding for the Ex-Im Bank, which provides favorable financing to U.S. firms seeking to sell products abroad, expired on June 30.
The Business Roundtable is heavily skewed to strong exporting firms, including General Electric, which in recent months has announced the creation of jobs and investments outside the U.S., blaming Congress for allowing the Ex-Im Bank to expire.
The Federal Reserve's plan to raise interest rates from near zero, perhaps as soon as mid-December, would have "not much of an impact" on investment plans, Stephenson said.
Despite their downcast outlook, the CEOs estimate U.S. economic growth next year will be 2.4%, in line with economists generally.
Copyright Agence France-Presse, 2015