The CEO’s optimism continues to decline, further dropping from all-time highs of 2021

After 9 months of economic uncertainty, the CEO’s optimism continues to decline.

The Business Roundtable’s latest quarterly survey of top American business leaders released Wednesday finds pessimism grows among the American C-suite as companies mull over what could happen to the US economy in the next six months.

“Global economic uncertainty continues to mitigate CEO sentiment for national plans and expectations,” Mary Barra, CEO of General Motors (GM), president of the Business Roundtable, said in a statement, adding “We must remain steadfast in putting the foundations for future economic growth are in place. ”

Then, during a panel discussion with reporters, Business Roundtable CEO Joshua Bolten said, “All our CEOs are bracing for a situation where the economy is experiencing a severe recession,” adding, “He’s really alone. a question of how deep this situation is. ”

The drop in sentiment was evident across the board. The results show that in the last quarter, hiring plans fell by 11 points, capital investment plans fell by 11 points, and expectations for sales fell by 12 points.

Mary Barra, president and chief executive officer of the General Motors Company, in May. (PATRICK T. FALLON / AFP via Getty Images)

Factors such as high inflation, potential Fed interest rate hikes, the war in Ukraine and a possible energy crisis in Europe have been cited as the factors that are bringing down CEO sentiment. And the poll was conducted before events this week – from a possible freight rail strike to worse-than-expected inflation figures – further dampened the economic mood.

The group interviews CEO members each quarter to measure how companies are planning the immediate road ahead, both in terms of sales expectations and capital spending and employment plans. This edition of the survey, conducted between August 12 and September 7, saw the input of 170 CEOs.

New lows for 2022

Just nine months ago the economic outlook for the nation’s CEOs hit an all-time high, but has since faced a decline in stomach in early 2022 as inflation and other factors have dragged down markets and optimism. .

The survey included a 19-point decline in the second quarter, which marked the sixth largest quarterly decline since the index began in 2002.

Wednesday’s valuation of 84 was a 12-point drop to further move away from its recent high of 124. The index managed to stay well above the recent low of 34, recorded just after the coronavirus pandemic swept the world at the beginning of 2020. the valuation is on par with the survey’s long-term average and above what the group considers the “expansion or contraction threshold of 50”.

“I see signs that we could go into recession”

Business Roundtable CEO members recently appeared on Yahoo Finance and voiced many concerns about the troubled waters ahead.

AT&T (T) CEO John Stankey, for example, recently sat down with Yahoo Finance and said it’s hard to predict if a recession is around the corner. “Even if we miss a total recession, the question is: is growth strong enough to really supplant the high levels of inflation?” he asked, adding “I think we will have to enter the fourth quarter, the first quarter of next year, to really see what the result of that game will be.”

Another panel member, Kathy Warden, president and CEO of Northrop Grumman (NOC), said in a recent Influencers episode that she didn’t think the US was in a recession now, but that economic conditions were affecting her company. of defense and technology. “I see signs that we may be headed for a recession,” she said, adding that a contraction could actually help drive a better balance between supply and demand.

Another member, representing another sector of the economy, sees things a little more stable. Hal Lawton, CEO of Tractor Supply Company (TSCO), said: “We expect a very good fourth quarter and we think that spending and consumer behavior will remain substantially as it is now.”

HP (HPQ) is another member and they recently lost their quarterly earnings report. CEO Enrique Lores told Yahoo Finance Live that “we expected a slowdown in consumption, but clearly the slowdown has been greater than we expected,” adding that for the coming months they expect sales to be “lower than expected. we expected a quarter ago, but it is still significantly larger than it was before the pandemic ”.

A focus on “the nation’s current licensing process”

The Washington-based Business Roundtable is made up of CEOs from hundreds of the nation’s largest companies with a focus on “sound public policy”. With Wednesday’s release, the group also assessed its political priorities for the rest of the year.

High on the list of priorities is permission for reforms to help stimulate energy production in the United States and concerns that the current tax code is penalizing investment in research and development.

Lynn Good, chairman and CEO of Duke Energy (DUK), chair of the Round Table’s smart regulation committee, says the current licensing process hampers companies’ ability to invest.

Congress aims to hold a vote on the controversial issue by the end of this month. Senator Joe Manchin (D-WV) has secured the promise of a vote as part of the deal for his all-important support for the Inflation Reduction Act, but many people are skeptical that he could get it through with some Republicans and Democrats who already announce their opposition.

Good, hinting at ongoing negotiations and the unstable nature of the final bill, said Wednesday that “We look forward to working bipartisanally as these various proposals come to the fore,” adding that both the Business Roundtable and individual companies. they were directly involved in conversations with lawmakers.

US Senator Joe Manchin (D-WV) attends an event to celebrate the enactment of the

Senator Joe Manchin (D-WV) attends a White House event to celebrate the enactment of the “Inflation Reduction Act of 2022” on September 13 (REUTERS / Kevin Lamarque)

The roundtable also warned this week that a possible nationwide closure of freight railways would be an “economic catastrophe”.

On Wednesday morning, Labor Secretary Marty Walsh welcomed both railroad companies and unions to a meeting at the Department of Labor in Washington as administration officials worked frantically to avoid a closure. On Wednesday afternoon, a spokesperson for the department said the talks would continue as “the parties are negotiating in good faith and have pledged to remain at the table today.”

Bolten says this is another issue where the roundtable is in direct contact with negotiators and the White House to “make sure they appreciate the depth of the disaster that will be imposed on the economy” if the talks fail.

This story has been updated.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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