The nation’s top business leaders are upbeat about sales, investment and hiring heading into the next six months.
An index measuring CEO sentiment increased to 84.5 from 79.1 in the July-September quarter, and expectations for economic growth next year remained in line with the previous two quarters at 2.2 percent, according to the Business Roundtable’s (BRT) fourth quarter economic outlook.
{mosads}While the outlook is improving, the chief executives expressed concern about the regulatory environment weighing down growth.
“Our expectations are consistent with an economy that will continue along the path of steady, modest recovery into the first half of 2014,” said Jim McNerney, BRT’s chairman and head of Boeing.
“These soundings are also consistent with an overall economy that, despite progress, is not yet performing at its full potential.”
All told, 39 percent of CEOs reported that regulatory costs were the top cost pressure facing their business over the next six months, followed by labor and healthcare costs.
Regulatory costs also were the top concern in the final three months of 2012.
The survey showed that 39 percent of respondents said they would increase capital spending in the next six months, compared with 27 percent in the third quarter.
Hiring got a small boost, with 34 percent saying they will increase hiring compared with 32 percent in the July-September period.
McNerney and BRT President John Engler said the business community is more optimistic that congressional budget leaders will reach a compromise providing a clearer direction for next year’s budget.
A budget plan should help to avoid another government shutdown or churn up concerns over raising the debt ceiling, giving the economy the extra nudge it needs to pick up pace, they said.
While “we all still have a healthy dose of skepticism” there is the hope that even a short-term budget deal would have a “positive impact on the economy,” McNerney said.
They said they are “heartened” by discussions between House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairwoman Patty Murray (D-Wash.).
McNerney and Engler noted that the environment in Washington is more positive than the past two years with lawmakers vowing to leave town ahead of Christmas, meaning no battles, like the “fiscal cliff” last year, over the holidays.
When looking into the economic future, McNerney said he can’t recall another five-year period — from when the financial crisis hit in 2008 — where businesses faced so much uncertainty on such a wide range of fronts from taxes to regulations.
Now is the time, they say, for policymakers to finally give the economy the chance to take off.
“We have an economy on the cusp of growing,” McNerney said, and “we’re looking for a some kind of catalyst here.”
“Washington sorting themselves out should provide an incremental lift that would provide a more predictable environment for businesses to invest the cash on their balance sheets and hire more people,” McNerney said.
Engler said that pulling back from the “chaos, uncertainty and abyss will have calming, soothing effect to look ahead.”
While a short-term budget deal should help, any framework that forces Congress to eventually consider tax and entitlement reforms could “turbo-charge” economic growth, he said.
“It needs to be nurtured, encouraged and brought to realization.”