Economic expectations of the nation’s top business executives dimmed in the third quarter over concerns about policy uncertainty and the uptick in international crises.
CEO’s plans for the next six months of sales, capital spending and hiring all declined moderately in the third quarter overall to 86.4 from 95.4 in the second, the Business Roundtable said on Tuesday.
{mosads}The long-term average of the index is 80.2.
“While some U.S. economic indicators are improving moderately, the results from our survey of CEOs seem to reflect an underperforming U.S. economy held back by policy uncertainty and growing conflicts around the world,” said Randall Stephenson, chairman of Business Roundtable and CEO of AT&T.
“The U.S. economy continues to perform below its potential,” Stephenson said.
CEOs expect economic growth of 2.4 percent for the year.
“We believe Congress and the Administration must focus on policies that drive economic growth, including tax reform, immigration reform, trade expansion and long-term fiscal stability,” he said.
The latest survey showed that nearly 90 percent of CEOs said that tax reform, including lowering the corporate rate of 25 percent and a competitive territorial tax system, would encourage additional investment or cause them to expand their U.S. operations.
Stephenson said that the lack of action on a tax extenders package has been the main reason for dampening CEO sentiment.
“We had high expectations something would happen this year,” he told reporters on a conference call.
He argued that there is general bipartisan agreement that making the tax system more competitive is the one thing that can drive economic growth.
Passage of a tax package could help bridge the gap to more comprehensive reform, which would quell the recent inversion fever that has hit Washington, Stephenson said.
“Inversions are a symptom of the broader problem,” he said.
He urged passage of a trade promotion authority bill that would allow Congress to quickly move any trade agreements that reach Capitol Hill.
In the June-September quarter only 34 percent of CEOs said they expected to pick up hiring compared with 43 percent in the spring while 20 percent said they would decrease hiring while only 14 percent said that in the second quarter.