US CEOs Pessimistic about Economy
US chief executives have a bleak vision of the domestic economy in the fourth quarter. They forecast a three year low in the period due to the concerns about the fiscal cliff. The CEO Economic Outlook Index that was released Wednesday dropped to 65.6 in the fourth quarter after a sharp decline in the third. A reading above 50 shows growth.
The drop shows corporate worries remained high more than two weeks before the deadline for President Barack Obama and Republicans in Congress to reach a compromise to avoid the fiscal cliff. If a deal is not reached, it could result to automatic spending cuts and the expiration of tax cuts.
Business groups said that the uncertainty about what their taxes would be in 2013 is holding back decisions on capital spending and hiring. This led to the nation’s sluggish recovery from the recession that ended more than three years ago.
160 US CEOs sent a letter to US President Obama and Republican congressional leaders Tuesday to urge them to reach a deal to prevent the economy from going over the fiscal cliff and go into another recession. The number of CEOs planning to add jobs in the United States is almost the same as those who want to cut jobs.
29 CEOs plan to add jobs in the United States in the next six months. The same percentage was expecting to slash jobs. There were less CEO who said that they planned to slash jobs in the fourth quarter than those who had said so in the third quarter.
30 percent of CEOs expect to improve their US capital spending within the same time frame and 58 percent estimated their sales to increase. The number of CEOs who expected to cut their capital spending and forecast sales decline increased.