Business

Business Roundtable: CEOs Feel More Optimistic About the Economy, But…

The Business Roundtable's new CEO economic outlook study shows the highest level of optimism in at least two years, but the executives also say the economy is performing below its potential.

There’s good news and more troubling news in the Business Roundtable’s latest report on CEO expectations for the U.S. economy.

The trade group’s Economic Outlook Index, a barometer of how chief executives feel about the economy, jumped to 92.1 for the first quarter of 2014—a big leap from the 2013 fourth-quarter level of 84.5 and well above its long-term average of 79.7. In fact, it’s the index’s highest level in the past two years. (The finding corresponds with a similar one in the nonprofit space in a study by McKinley Advisors. Associations Now‘s Mark Athitakis pondered the implications of that research earlier this month.)

But the sunny outlook may not translate to a big leap in hiring—only 37 percent of the CEOs surveyed expect to increase headcount in the next six months. While that’s a modest rise from the previous survey’s 34 percent, it speaks to a bigger issue, according to Business Roundtable Chairman Randall L. Stephenson.

“CEO expectations for overall economic growth are well below our economy’s potential,” Stephenson, also the chairman and CEO of AT&T, said in a press release.

The report says the CEOs estimate a 2.4 percent increase in gross domestic product growth during 2014. As the Associated Press notes, that’s better than 2013’s 1.9 percent economic growth, but most economists lean toward a higher GDP projection of almost 3 percent for this year. In a conference call this week, Stephenson said his group thinks the GDP [PDF] has the potential to grow 4 to 4.5 percent.

So what could push it higher? According to the Business Roundtable, more agreement in Washington on key business issues, such as immigration reform for high-skilled workers, business tax reform, and the loosening of U.S. trade agreements. A key example of this, from the group’s perspective, is the budget deal worked out between congressional budget committee chairs Sen. Patty Murray (D-OR) and Rep. Paul Ryan (R-WI) late last year.

“To have a government that’s in regular order once again and actually operating under a budget, we think, is very important for driving investment and economic growth,” Stephenson told the Wall Street Journal this week. “We give a lot of credit to the Ryan-Murray plan.”

(iStock/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

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