Business Roundtable Q2 CEO Economic Outlook Index Declines; Expectations and Plans Decelerate Amid Continued Geopolitical, Global Economic Uncertainty
Washington – Business Roundtable today released its Q2 2022 CEO Economic Outlook Survey, a composite index of CEO plans for capital spending and employment and expectations for sales over the next six months. The overall CEO Economic Outlook Index declined 19 points from last quarter to 96 but remains well above its long-run average of 84 and the expansion or contraction threshold of 50.
The three subindices were as follows:
- Plans for hiring decreased 22 points to a value of 90.
- Plans for capital investment decreased 20 points to a value of 86.
- Expectations for sales decreased 15 points to a value of 111.
Although the index remains above its historical average, this quarter’s results reflect a drop in CEO expectations and plans for the next six months, producing the sixth largest quarterly decline in the history of the index. The results are consistent with other surveys and economic data reflecting decelerating growth and heightened global economic concerns due to continued geopolitical and policy uncertainty.
Additionally, in response to a special question posed this quarter, more than half (56%) of CEOs had either observed delays or difficulty in delivering to customers, higher costs for consumers or both due to insufficient supply of semiconductors, with concentration in five sectors – machinery; metals and minerals; chemicals and plastic products; motor vehicles and transportation equipment; and computers and electronics. Over 90% of CEOs in these sectors reported one or more impacts from the chip shortage, including delays or difficulties delivering, higher costs for consumers or delayed or reduced capital expenditures. The range of affected sectors demonstrates the widespread impact of limited semiconductor supply.
Business Roundtable Chair Mary Barra, Chair and CEO of General Motors, said: “The softening of quarterly CEO sentiment reflects uncertainty driven by the unprecedented times we face as a nation and global community. One important step Congress can take amid this uncertainty to position the U.S. for strong long-term economic growth and competitiveness is to pass bipartisan innovation and competitiveness legislation that funds CHIPS and boosts U.S. semiconductor manufacturing, strengthens R&D and innovation investments and generates economic opportunity for American workers.”
Business Roundtable CEO Joshua Bolten said: “To put the U.S. on stronger economic footing during this period of substantial uncertainty, Congress and the Administration should pursue policies that alleviate inflationary pressures and promote long-term growth. We urge the Biden Administration to double down on domestic energy investment and take additional action to address the elevated risk of a worsening global energy crisis. We also call on the Administration to lower tariffs. We strongly oppose efforts in Congress to impose tax increases on U.S. businesses that would erode America’s competitive standing and increase long-term economic risk.”
In their third estimate of 2022 U.S. real GDP growth, CEOs projected 3.2% growth for the year.
