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CEOs Forecast Continued Slow Economic Growth
Expectations for strong business performance remain; modest declines in sales and capital expenditures expected
CEO Economic Outlook
Washington – Results of Business Roundtable’s (BRT) third quarter 2013 CEO Economic Outlook Survey show a small decline in CEO economic expectations for expansion over the next six months.
Overall CEO expectations for the U.S. economy dropped modestly in the third quarter, as reflected in the composite Business Roundtable CEO Economic Outlook Index, which declined to 79.1 from 84.3 in the previous quarter. CEO expectations for 2013 GDP growth matched the 2.2 percent annual rate reported in last quarter’s survey.
“CEO expectations for the next six months remain essentially the same with some downside bias. Expectations for sales and capital investment both declined modestly in this survey,” said Jim McNerney, Chairman of Business Roundtable, and Chairman, President and CEO of The Boeing Company. “While U.S. business performance remains strong, as evidenced by robust recovery in the automotive sector, business leaders still see headwinds preventing a more sustained, robust recovery.”
BRT included an additional question in this quarter’s survey concerning the effects of political stalemate in Washington, D.C., on economic conditions. Fifty percent of responding CEOs indicated that the ongoing disagreement in Washington over the 2014 budget and the debt ceiling is having a negative impact on their plans for hiring additional employees over the next six months.
Overall, hiring expectations were essentially flat, ticking up only slightly from the previous quarter due to fewer CEOs expecting a decrease in hiring.
The CEO survey is now in its 11th year.
The survey’s key findings from this quarter and the second quarter of 2013 include:
CEO Capital Expenditures
Third Quarter 2013 BRT CEO Economic Outlook Survey Indices
The Business Roundtable CEO Economic Outlook Survey Index – a composite index of CEO expectations for the next six months of sales, capital spending and employment – decreased in the third quarter of 2013 to 79.1 from 84.3 in the second quarter. The Index stands at about its long-term average level of 79.3.
About the BRT CEO Economic Outlook Survey
Business Roundtable’s CEO Economic Outlook Survey, conducted quarterly since the third quarter of 2002, provides a forward-looking view of the economy by BRT member CEOs. The survey is designed to capture CEO sentiment regarding the current state and future direction of the U.S. economy by asking CEOs to provide their expectations about their company’s sales, capex and employment in the following six months. The data are used to create the Business Roundtable CEO Economic Outlook Index, and sub-indices for sales, capex and hiring expectations – diffusion indices that range between – 50 and 150, where readings above 50 indicate an economic expansion, and readings below 50 indicate an economic contraction. A diffusion index is defined as the percentage of respondents who report that a measure will increase minus the percentage who report that the measure will decrease.
An independent study in 2010 statistically showed that the change in the Index provides a leading signal of the change in U.S. GDP. The third quarter 2013 survey was completed between August 16 and September 6, 2013. Responses were received from 134 member CEOs, 63 percent of the total Business Roundtable membership. The percentages in some categories may not equal 100 due to rounding.