As the economy worsens, CEO optimism is beginning to decline—though not as much as usual during times of recession.
- While the general outlook of America’s CEOs is beginning to look a bit pessimistic, attitudes are still more positive than typical when in a recession.
- Negative outlooks are leading to a slowdown in growth and hiring.
- Economic outlooks have been declining every quarter this year, but the latest report from Business Roundtable CEO Economic Outlook index shows an 11-point decline.
- The report marks the first time since 2020 that the index has dropped below average numbers.
Why it’s news
Though overall CEO outlook has been on the decline over the last year, as recently as November, companies were still planning to grow and continue hiring. Now, those plans have changed.
Only 40% of CEOs have plans to hire additional employees in the next six months. Compared to last year, 77% had plans for expansion.
In addition to fewer plans for hiring, businesses are preparing for less capital spending and are preparing investors for lower expected sales.
The decline in CEO optimism is likely driven by continued supply chain difficulties and inflation-driven prices. These factors could make the domestic market unpredictable in the coming months.
Actions taken by the Federal Reserve to slow spending in order to curb inflation could also be affecting decisions from CEOs.
“With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months. We urge U.S. policymakers to position America for the strongest economic recovery possible. Sound policy action in the short term will yield long-term economic benefits and lay a solid foundation for our growth and competitiveness,” says Business Roundtable Chair Mary Barra.
“The Fed has been pumping the brakes to rein in inflation, and the survey results are unsurprising in that context. To strengthen the economy, Business Roundtable urges Congress and the Administration to undertake pro-growth policies, including restoring full and immediate expensing of American R&D investments this session and reforming the permitting system to expedite energy infrastructure projects. Given the uncertainty facing the economy, we also urge Congress to address the debt ceiling as soon as possible,” Business Roundtable CEO Joshua Bolten says.