U.S. CEOs more pessimistic on economy, capital expenditures
CHICAGO (Reuters) - U.S. chief executives are slightly less positive about the economy's growth prospects this year and fewer of them expect to increase their capital expenditures in the next six months, according to a quarterly by the Business Roundtable released on Tuesday.
The CEOs said they expected U.S. gross domestic product to rise by 2.3 percent in 2014, which is short of normal growth rates in past economic recoveries, according to the survey.
In the last survey released in March, CEOs said they expected economic growth of 2.4 percent this year.
"CEO expectations for both investment and growth remain well below the potential of the U.S. economy and below what we should be experiencing at this stage of a recovery," said Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T Inc (T.N), in a press release.
Only 44 percent of CEOs said they expected to increase their companies' capital investment in the next six months, down from 48 percent in the last survey.
"There's broad consensus among many economists and policymakers, and obviously business people, that real improvement in economic growth is simply not on the cards if you don't have capital investments," Stephenson said on a conference call with reporters after the survey's release.
Stephenson said the increased pessimism over capital expenditures during the second quarter was due in part to the expiration of dozens of business tax benefits at the end of 2013, referred to as "tax extenders," and the failure of Congress thus far to reinstate those benefits.
"It's not a surprise when you have a significant increase in tax outlays that would have an impact on investment," Stephenson told reporters.
On a positive note in the second-quarter survey, 43 percent of respondents said they expected to hire more people in the next six months, up from 37 percent in March.
The survey, conducted between May 14 and June 4, had responses from 131 member CEOs. Of those, 73 percent said they expected their sales would increase, compared with 72 percent a quarter ago. And fewer expect sales to decline: only 2 percent versus 5 percent in March.
The Business Roundtable CEO Economic Outlook Index - a composite of investment, sales and hiring expectations - rose to 95.4 in the second quarter from 92.1 in the first quarter. A reading above 50 indicates economic growth is expected.
The Business Roundtable, which advocates for public policy, has put at the top of its agenda pushing for corporate tax and immigration reform, as well as expanded trade agreements.
(Reporting by Nick Carey; Editing by Nick Zieminski)
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