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CEOs now see gloomy third quarter, drop growth expectations
Question of the Day
Four major business groups see gloomy times ahead for the job market and the economy, according to a string of separate surveys and polls released this week that cast fresh doubt on hopes that the economic recovery may have turned the corner.
Top executives and small-business owners polled by the Business Roundtable, the National Association of Manufacturers, the National Federation of Independent Business, and chief financial officers surveyed by the management firm Deloitte pointed to uncertainty posed by new regulations, shaky demand overseas and the “fiscal cliff” facing the federal government as prime reasons keeping companies from investing and hiring at a faster pace.
The Business Roundtable, an association of CEOs from some of the nation’s top companies, on Wednesday dropped its growth expectations for the third quarter to the lowest level since the middle of the Great Recession. The trade group lowered projections for sales, capital spending and hiring in its latest CEO Economic Outlook Survey to their lowest levels since 2009.
The report was released on the same day as the chief financial officer survey from Deloitte, which found that CFOs also are increasingly pessimistic about the futures of their companies.
Those reports follow by a day a joint survey from the National Association of Manufacturers (NAM) and National Federation of Independent Business (NFIB), which found a majority of companies believe the economy is worse now than it was three years ago, shortly after President Obama took office.
The Romney camp seized on the cluster of surveys to blame Mr. Obama for rising business pessimism.
“For nearly four years, job creators have struggled in the Obama economy,” said Ryan Williams, a Romney campaign spokesman. “Business leaders have the gloomiest outlook in three years, and the president’s failed economic policies of higher taxes and more regulations will only make things worse. Mitt Romney understands what it takes to start and grow a business — and, as president, will implement pro-growth policies to create 12 million new jobs and get small-business owners back on their feet.”
The White House did not respond directly to a request for comment, but earlier in the day, Obama campaign spokeswoman Jen Psaki talked to reporters who were traveling with the president in Ohio. She defended Mr. Obama’s economic record and said he has the most credible plan to lower deficits, which will help the economy.
“President Obama is the only one who has a comprehensive, balanced approach to bringing the deficit down,” she said. “When your approach is, like Gov. Romney’s is, [when] your first offering is a $5 trillion tax cut for millionaires and billionaires, it’s hard to take your plans for deficit reduction seriously.”
The gloomy economic outlook for businesses comes on the heels of more hopeful signs this week for the economy on both consumer sentiment and housing prices. The Conference Board on Tuesday reported that its Consumer Confidence Index surged nearly 10 points to 70.1, while the S&P/Case-Shiller Home Price Index rose 1.6 percent last month, and is up a total of 8 percent since the beginning of the year. But as far as businesses are concerned, the uncertainty created by the fiscal cliff and mounting regulations outpaces any gains in consumer confidence.
The fiscal cliff — an end-of-the-year deadline for a budget deal on Capitol Hill to avoid deep automatic spending cuts and tax increases — has businesses putting off hiring and spending decisions, because they don’t know what to expect in the coming months and years, said Jim McNerney, the CEO of Boeing Co. who also heads the Business Roundtable.
“This complete Mexican standoff that we have now is not getting us anywhere,” he told reporters.
Business Roundtable President John Engler called the impending budget disaster a “fiscal Everest.”
“This is something that urgently needs to be addressed,” Mr. Engler said. “This is the same problem the NFL is having. The players aren’t quite clear how to play the game, because the refereeing is so bad.”
Mr. Engler urged lawmakers to take action now to avoid the automatic spending cuts and tax increases set to kick in if no deal is made.
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About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
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