The Chief Executive Officers (CEOs) in the United States expect that 2014 gross domestic product (GDP) will increase by 2.3%, according to the Business Roundtable’s second quarter 2014 CEO Economic Outlook Survey. In the second quarter, the Business Roundtable CEO Economic Outlook Index, a composite of expectations for investment, sales and hiring, rose to 95.4 from 92.1 in the previous quarter.
The 2.3% GDP growth rate is down from last quarter’s estimate of 2.4%, and represents below-normal growth compared to past economic recoveries, and is well below the economy’s potential. In addition, CEOs anticipate a decline in expectations for capital expenditures, and a moderate improvement in the outlook for sales and hiring over the next six months.
“CEO expectations for both investment and growth remain well below the potential of the U.S. economy and below what we should be experiencing at this stage of a recovery,” stated Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T Inc. (NYSE:T).
“Congress and the Administration must focus on policies that drive economic growth, including tax reform, immigration reform, trade expansion and long-term fiscal stability. The first step toward immediate growth should be passage of business tax extenders legislation that serves as a bridge to tax reform.”
Results of the survey reflect the impact of negative economic growth in the first quarter tied to uncertainty and lack of progress on key growth drivers such as tax extenders.
According to the survey, only 44% of CEOs expect to increase their companies’ U.S. capital investment, down from 48% last quarter. Also, 43% of CEOs expect to add U.S. employees, while 73% of executives anticipate sales will increase in the next six months.
Included in the survey a special question on short-term tax policy. The results show that 77% of CEOs said that passage of business tax extenders legislation, as a bridge to tax reform, would improve the investment climate for their company, customers and suppliers.
A total of 131 member CEOs responded to the survey, representing 64% of the total Business Roundtable membership. The survey is designed to capture CEO sentiment regarding the current state and future direction of the U.S. economy.