CEOs’ outlook for US economy dims ahead of Fed rate decision

Washington: Chief executive officers of large US companies are becoming less optimistic about the prospects for the world’s largest economy, with more leaders planning to cut capital spending and employment in the next six months.

The Business Roundtable CEO Economic Outlook Index, a measure of CEO expectations for revenue, capital spending and employment, fell to 74.1 in a quarterly survey released Tuesday in Washington, down from 81.3. That’s the lowest level since 2012, according to results compiled by Bloomberg, and below the index’s long-term average of 80.4. The survey, with responses from 141 member CEOs, was completed between Aug. 5-26.

The survey shows a weakening outlook just two days before Federal Reserve policymakers decide whether to end more than six years of near-zero interest rates. The CEOs projected US economic growth of 2.4 per cent this year, down 0.1 percentage point from the previous forecast.

“The downward trend in CEO plans for investment and hiring continues to reflect reasonable caution regarding near-term prospects for modest US growth,” Randall Stephenson, the AT&T Inc. CEO who serves as chairman of the Washington-based Business Roundtable, said in a statement.

The share of CEOs expecting a decrease in their companies’ US capital spending in the next six months rose to 20 per cent in the latest survey from 13 per cent in the previous one. Thirty-two per cent said their firms’ US employment will decline, compared with 26 per cent in the prior survey.

The Business Roundtable represents companies with $7.2 trillion in annual revenue, almost 16 million employees and more than a quarter of the total value of US stock markets, according to the group.