Treasury Secretary Jacob J. Lew, left, talks about the budget at a Washington… (Alex Wong / Getty Images )
WASHINGTON -- America's corporate bosses are feeling a little more nervous about the economic outlook -- not a promising sign for a step-up in hiring.
A measure tracking chief executive officers' expectations for the economy dropped to 79.1 in the third quarter, from a 12-month high of 84.3 in the second quarter, according to the Business Roundtable. The index is based on CEOs' assessment of their company's sales, capital investments and employment prospects.
The survey results reflect an economy that "continues to grow, but slowly and not to its full potential," said James McNerney, Boeing Co. chief executive and Business Roundtable chairman. The group represents many of the nation's largest corporations; 134 member CEOs responded to the poll conducted between mid-August and early September.
"Not too hot, not too cold," McNerney said of the economy.
More worrisome perhaps are the lowered expectations for capital spending, which is essentially an investment in future growth and productivity. In the third quarter, just a little more than one-fourth of CEOs indicated that they would ramp up spending for such things as equipment and machinery, whereas 37% said so in the April-to-June period.
There was little change in their plans for hiring: About a third continue to project an increase in net employment at their companies in the next six months, while about one-fourth are looking to trim staff. The remainder see no changes in hiring.
However, that picture could dim if Washington politicians drag out the battle over the debt ceiling and next year's budget.
If people doubt that such uncertainty has a real effect on corporate decisions, that's not what the CEOs are saying: Half of the Roundtable members said the ongoing disagreement over the budget was souring their plans for hiring more workers.
"There is no question that failure to reach agreement on the debt limit would have significant impact on the U.S. economy, and we don't want that," McNerney told reporters during a conference call Wednesday. Democrats and Republicans in Washington need to give a little, he said, and find a solution.
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