Fiscal Cliff Inaction Creates Business Pessimism
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Two new surveys show top leaders in companies are feeling more pessimistic about the economy, and Washington bears part of the blame.
The Business Roundtable’s CEO Economic Outlook Survey finds that the heads of top American companies have lowered their expectations for future sales, capital spending, and hiring. As you can see in the chart below, these expectations have been falling throughout 2012.
A Deloitte survey of North American Chief Financial Officers (CFOs) also finds more pessimism with lower expected growth in sales, earnings, capital investment and hiring. More than 80% of U.S. CFOs think our economy has stalled or will about to. These findings are the “sharpest decline in expectations we have seen in the two-and-a-half-year history of the survey” according to the accounting and consulting company’s survey.
Both studies show policy uncertainty from Washington plays a big role. In the Deloitte survey, those CFOs who said they are preparing for the “fiscal cliff,” automatic tax increases and across-the-board budget cuts set to take effect in 2013, are doing so by delaying new hiring and investments.
Jim McNerney, Chairman of the Business Roundtable and Chairman, President and CEO of Boeing said, “The downshift in quarterly sentiment reflects continuing concern about the strength of the recovery, including uncertainty over the approaching fiscal cliff and accompanying debates about the tax code, sequestration and the debt ceiling.”
I’ll be interested in seeing the next U.S. Chamber Small Business Outlook Survey that will be out next month. The most-recent one found that only 20% of small business owners were optimistic enough to say they would hire more employees in 2013, and 90% worried that Congress wouldn’t fix the impending fiscal cliff.
These surveys show that Washington’s irresponsible inaction is instilling uncertainty among businesses of all sizes.