After a year of economic uncertainty, CEO optimism is waning.
The latest quarterly survey of America’s top business leaders from the Business Roundtable released Monday found that pessimism is on the rise among America’s chief executives when it comes to how they are preparing for what could be coming for the US economy in the short term.
“With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months,” General Motors (GM) CEO Mary Barra, the Business Roundtable chair, said in a statement.
The continued drop in sentiment was evident across the board, with plans for hiring decreasing by 17 points, plans for capital investment falling by 7 points, and expectations for sales declining by 8 points over the last quarter.
CEOs identified growing labor costs as a top pressure point alongside other headwinds like growing material costs, ongoing supply chain disruptions, and price pressures from the energy sector that dragged on CEO sentiment.
The group also offered its first estimate of 2023 US GDP growth, with CEOs projecting a relatively paltry growth rate of 1.2% for 2023.
The DC-based Business Roundtable is composed of CEOs from hundreds of the nation’s largest companies and the group surveys its CEO members each quarter to measure how businesses are planning for the immediate road ahead. This edition of the survey, conducted between October 31 through November 28, featured input from 142 CEOs.
A pessimistic end to 2022
It was a year ago when the economic outlook from the nation’s CEOs reached an all-time high but business leaders have since faced a stomach-churning year with inflation and other factors weighing on markets and executive optimism.
Wednesday’s rating of 73 is a far cry from the 20-year high of 124 in the fourth quarter of 2021. But the index still isn’t approaching its recent low of 34 — which was recorded soon after the coronavirus pandemic began in early 2020. This week’s rating is above what the Business Roundtable considers the “expansion or contraction threshold of 50.”
The rating decline continues a year-long trend of decreases from 115 in the first quarter to 96 in the second to 84 in the third quarter when Business Roundtable CEO Joshua Bolten told reporters at the time that “all of our CEOs are preparing for a situation in which the economy does experience a sharper downturn.”
“It’s really just a question of how deep this goes,” he added.
The group is also focused on “sound public policy” and weighed in on their policy priorities for the rest of the year in Wednesday’s release.
“To strengthen the economy, Business Roundtable urges Congress and the Administration to undertake pro-growth policies, including restoring full and immediate expansion of American R&D investments this session and reforming the system permitting to expedite energy infrastructure projects,” Bolten said in a statement. “We also urge Congress to address the debt ceiling as soon as possible.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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