* Outlook index up sharply from December
* Just 29 percent of CEOs plan to add jobs in U.S.
* Budget impasse in Washington remains main concern
By Scott Malone
March 13 U.S. chief executive officers'
confidence in the economy rebounded in the first quarter, but
they remained leery of taking on new workers at home, according
to a survey released on Wednesday.
The Business Roundtable's CEO Economic Outlook Index rose to
81.0 in March from 65.6 in December, according to the quarterly
survey, which was conducted before the recent sharp rise in the
U.S. stock market. Any number above 50 indicates growth.
Officials with the group, whose members employ about 16
million people, blamed the continued wariness about hiring on
uncertainty in Washington, where President Barack Obama's
Democrats and the Republicans who control the House of
Representatives have been squabbling for two years without
reaching an agreement on how to reduce the $16.7 trillion
"We are discouraged that we can't resolve some of the issues
... that relate to the framework of the economy, which are tax,
fiscal, budgetary considerations," said Boeing Co CEO Jim
McNerney, who chairs the Roundtable. "We keep lurching from one
crisis to another there in D.C., which does put a little bit of
a damper on investment, particularly long-term investment."
The CEOs' increased confidence reflected improved
expectations for sales and plans to boost U.S. capital spending
over the next six months.
But CEOs remained unlikely to add workers, with just 29
percent planning to boost U.S. employment over the next six
months, the same percentage as in December. The slow recovery in
hiring has been one of the biggest drags on the U.S. recovery
from a recession that ended almost four years ago.
Unemployment in the United States has started to track
downward in recent months. A report released on Friday showed it
dropped to 7.7 percent in February from 7.9 percent in January,
hitting its lowest level since December 2008.
In the first quarter, fewer CEOs said they were likely to
cut jobs at home over the next six months. Just 25 percent said
they planned to reduce headcount, down from 29 percent in
'DISCONNECT' BETWEEN MARKET, HIRING
McNerney acknowledged a "disconnect" between the CEOs'
confidence and that of investors, who last week pushed the
widely watched Dow Jones industrial average to an
"There probably is a disconnect," McNerney said, "but I
think economists would probably tell you that there is a lot of
money coming into the stock market out of very low interest rate
Across corporate America, CEOs are complaining that the
federal budget battles have taken a toll on confidence.
In his annual letter to shareholders earlier this week,
General Electric Co 's Jeff Immelt warned that questions
about tax policy and spending cuts might hurt capital
While leaders in Washington averted the "fiscal cliff" of
automatic spending cuts that would otherwise have taken effect
on Jan. 1, the smaller mandatory reductions that took effect
this month have worried CEOs, McNerney said.
"There might have been a sigh of relief," McNerney said,
"but it's kind of like the trip to the gallows was pushed out
Despite these worries, 72 percent of CEOs expect their
companies' sales to rise in the next six months, up from 58
percent who expected that in December.
The percentage who plan to boost U.S. capital spending
increased to 38 percent from 30 percent. Investing in new
equipment can help companies to meet modest increases in demand
without adding workers.
CEOs also modestly raised their expectations for growth in
real U.S. gross domestic product, which they now expect to rise
2.1 percent this year, up from the 2.0 percent gain forecast in
The Roundtable surveyed 144 member CEOs from Feb. 11 through