Yahoo Finance CEOs are less optimistic as they pull back hiring plans
CEO optimism is dipping slightly as executives reduce their hiring plans amid concerns about inflation, higher interest rates, and the broader global economy.
That was the takeaway from the latest quarterly survey of America's top business leaders released Wednesday by the Business Roundtable, an association in Washington composed of CEOs from hundreds of the nation's largest companies.
It reported a modest three-point dip in the sentiment of CEOs who were asked what they expected for the next 6 months. The decline was especially notable on the hiring front, where expectations for hiring in the months ahead hit the lowest level since the third quarter of 2020, during the height of the pandemic.
But at the same time, plans for capital investment actually increased by 1 point, and expectations for sales over the next six months held steady.
America’s business leaders say they expect GDP growth of 1.5% this year. That is not a breakneck pace but one that would indicate a soft landing for the economy after a year of economic disruptions.
At least one potential economic headwind is off the table with the recent debt-ceiling compromise that averted the prospect of a US default.
General Motors (GM) CEO Mary Barra, the Business Roundtable chair, said in a statement Wednesday that “action by Congress and the Administration to raise the debt ceiling was a welcome signal from Washington that bipartisan agreement at a consequential moment is achievable,” she said.
The Business Roundtable has been surveying members since 2002 and checks in each quarter to measure how businesses are planning for the immediate road ahead. This edition of the survey was conducted between May 17 through June 2 — as the debt ceiling deal was still being hammered out — and featured input from 143 CEOs.
The overall sentiment level stood at a level of 76. That is below the Business Roundtable's historic average of 84 but also well above what the roundtable considers the “expansion or contraction threshold of 50.”
The 20-year high for the survey came in the fourth quarter of 2021 when CEOs recorded a measure of 124. The historical low was 34 — recorded soon after the coronavirus pandemic began in early 2020.
This quarter’s survey also focused on a longstanding priority of the business community in Washington: permitting reform.
Of the CEOs surveyed, 82% said reforming the red tape around US permitting for energy infrastructure projects is needed. The debt deal signed into law this week included some — but not all — of the provisions that business groups have been seeking.
“We look forward to working with Congress to build on this important step forward with additional reforms and other policy wins for the U.S. economy,” Business Roundtable CEO Joshua Bolten said in a statement.
Permitting reform was addressed in a limited way in the recently enacted law, with modest changes to the National Environmental Policy Act to streamline the process. The 1970 law that allows the federal government to analyze the environmental impacts of proposed projects.
More reforms are needed, the CEOs say, to “improve American energy security and accelerate the clean energy transition.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
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