Archived Content

CEO Quarterly Survey: News Reports Highlight Slipping Capex, Sales

Dec 1, 2015

Business Roundtable members are again lowering their expectations for capital investment and sales over the next six months, according to the 4th Quarter CEO Survey released today. Hiring plans remained flat. GDP growth for 2016 was projected at 2.4 percent.

In an additional question asked every fourth quarter, business leaders also identified regulation as their companies' largest cost pressure, followed by labor costs and health care costs. 

News coverage:

Reuters, "For third consecutive quarter, U.S. CEOs cautious on economy: poll"

For the third consecutive quarter, U.S. CEOs expressed growing caution about the country's economic prospects in the short term and more said they expected to curtail capital investments over the next six months, according to a survey released on Tuesday.

Business Journals, "Why big businesses are cutting their capital investment plans":

A strong dollar, economic weakness abroad and increased international turmoil play a role in this decline in capital investment, since most BRT members are heavy exporters. But an uncompetitive corporate tax code and uncertainty over the future of tax incentives for business investment also are making CEOs more cautious about their capital spending plans, Stephenson said.
 
Tax reform remains an elusive goal, and CEOs once again have entered the fourth quarter with no action by Congress yet on extending tax breaks such as bonus depreciation and the research and development tax credit.
 
“It’s kind of hard to do capital planning and capital forecasting when you have that kind of lack of clarity on what the cost of capital is going to be when you deploy it,” Stephenson said.
Marketwatch, quoting Business Roundtable Chairman Randall Stephenson reacting to the latest ISM Manufacturing Report, "Manufacturers suffer worst performance since 2009, ISM finds":
Cheap oil has led to steep cutbacks in spending by a previously aggressive energy industry. Foreign customers are ordering fewer U.S. goods as their own economies struggle. And a soaring dollar has pummeled major exporters, keeping the ISM export index in negative territory for the sixth straight month. The last time that happened was three years ago.
 
“A strong dollar just puts us at a disadvantage,” said Randall Stephenson, chief executive of AT&T  and chairman of the Business Roundtable.
 
Another factor hurting U.S. businesses is the uncertain fate of a host of valuable tax breaks and credits that could expire at year end unless Congress reauthorizes them.

But on a bright note, The Washington Examiner, "Business lobby encouraged by end-of-year action in Congress."

Corporate leaders long critical of Congress' fiscal stand-offs are encouraged by what they see as progress on year-end efforts to fund the government, pass highway legislation and renew expired business tax breaks.
 
"You kind of line these all up and you say, 'OK, this is good,'" Randall Stephenson, chairman and CEO of AT&T, said on a call with reporters Tuesday. "It appears Congress is moving. It appears that there is going to be legislation passed that is going to accomplish a lot of things that have been queued up for a long time that can bring some predictability."