Top executives cut hiring amid concerns for U.S. growth

Jim Puzzanghera
Los Angeles Times

Chief executives at major U.S. companies reduced their hiring and spending plans as their overall assessment for the nation’s economy has fallen to a two-year low amid concerns about global growth and a potential federal government shutdown, according to a leading industry survey.

The CEO economic outlook index, released Sept. 22 by the Business Roundtable trade group, fell to 74.1 in the third quarter of the year, down 7.2 points from the previous quarter.

The figure, a composite of projections for sales, hiring and capital spending over the next six months, fell below its historical average of 80.4 for the first time since 2013, said Randall Stephenson, chief executive of AT&T Inc. and the group’s chairman.

“We have a strengthening dollar, slowing growth abroad and recent international financial market turmoil, and all of that has created some degree of uncertainty in the U.S. economy,” Stephenson said.

Growing concerns that Republicans and Democrats in Washington won’t be able to pass federal spending bills before the fiscal year ends Sept. 30 are adding to the uncertainty, he said.

“CEOs need to be assured the government is not going to be shut down because policymakers can’t agree on spending priorities,” Stephenson said.

Members of the trade group, which is composed of chief executives of large U.S. companies, will be in Washington this week urging lawmakers to pass a budget and extend expiring business tax provisions to ease the uncertainty, he said.

An inability by policymakers to resolve their differences could inflict more damage to the economy, Stephenson said.

“We’re getting late into the year. We’re looking at these budget issues we’re looking at talk of a government shutdown,” he said. “What might have been a cautious attitude by CEOs could turn into a defensive attitude by CEOs.”

Chief executives slightly downgraded their expectations for economic growth this year to 2.4 percent, which is in line with analyst forecasts.

But the real drop came in sales and hiring projections. Those indexes fell to two-year lows.

About 63 percent of chief executives said they expected U.S. sales to increase in next six months, down from 70 percent in the second quarter.

And nearly a third of respondents — 32 percent — said they expected to reduce their workforces over the next six months, up from 26 percent in the previous quarter.

Overall spending plans decreased slightly, the survey said.