Top chief executives across the US are not optimistic about the future of the American economy and are planning on reducing the amount they invest in their businesses over the next six months, according to a recent survey released on Tuesday.
However, the 129 chief executives that were surveyed said that they still expect to boost hiring. Forty percent of CEOs said they planned to increase employment at their businesses over the next six months, compared to 34% in the third quarter.
The Business Roundtable’s economic outlook index dropped from 86.4 down to 85.1 from 86.4 in the third quarter. This is the second straight quarterly drop for the index.
A reading over 50 indicates that the economy is growing.
AT&T Inc. CEO Randall Stephenson, the group’s chairman, said:
“The economy ended the year essentially where it started, performing below its potential,”
Economic growth in 2014 is averaging around 2.1%, however this low figure is mainly because of a first-quarter contraction.
Only 36% of CEOs said that they plan on increasing capital spending over the next six months, down 3% from the previous quarter. The percent of executives planning on decreasing spending rose, from 10% in the third quarter to 13%.
“Our CEOs identified U.S. tax policy as the most significant barrier to more investment,” Stephenson said.
It is clear that chief executives in the US want to reduce the current corporate tax rate, which is currently at 35% – the highest of any advanced economy. The group wants corporate tax to be cut down to 25%.
Both Democrats and Republicans agree, for the most part, that corporate tax needs to be lowered. But it is a topic of increasing debate.
Randall Stephenson said:
“Congress and the Administration should act now on tax extenders and Trade Promotion Authority to encourage additional business investment in the United States to help the economy grow and create more jobs.”