First look: CEO sentiment points to "steady-as-she-goes" economy
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More chief executives of America's largest companies plan to add workers than just three months ago, according to a new survey of 141 CEOs conducted by the Business Roundtable — seen first by Axios.
Why it matters: The survey results are consistent with a slow but steadily growing economy — one that looks likely to avoid the oft-predicted recession in coming months.
- This approach could keep the economy humming in the months ahead, even as they chill plans to invest in new equipment and software.
By the numbers: The BRT's economic outlook index rose 2 points to 74 this quarter. It peaked in Q4 2021 and has now hovered at levels showing steady, if unspectacular, growth for six straight quarters.
- Importantly, the reading is comfortably above the level that suggests the economy is expanding.
What they're saying: "The results of this quarter's survey are consistent with an economy that is cooling and the Federal Reserve's strategy to bring inflation back to target," BRT CEO Joshua Bolten said in a statement.
Between the lines: Last quarter, more CEOs indicated plans to fire workers. But that sentiment reversed: The BRT's hiring index jumped nearly 10 points, a sign that more leaders plan to expand their workforce — or at least hold headcount steady — than those planning to cut staff.
Yes, but: CEOs aren't planning to add workers at the rates that helped define the pandemic-era job market boom.
- For instance, the hiring sub-index stands at 55. In the same period in 2021, it peaked at 121.
Warning sign to watch: While most CEOs plan to hold capital spending plans steady, a growing share say they will slash investment in things like new machinery, factories or software in the months ahead.
- About 20% said as much in Q4 compared to the 14% who said so in the prior quarter.
- If that continues, it could crimp the economy as demand slumps for the types of workers and companies who build such items.
Of note: The BRT says that at least one factor behind moderating investment plans is expired Trump-era tax breaks that look unlikely to be re-upped by Congress. "With the decrease in plans for capital investment, it is critical that Congress restore provisions to support investment," Bolten said.
- Still, a significant share — about 48% — are planning no changes in capital spending, compared to the 53% who said so in the third quarter.
The big picture: The survey is the latest indicator to suggest the U.S. economy may be coming in for a soft landing.
- Inflation is way down from last year's peak, with minimal economic damage.
- CEOs surveyed by BRT expect the economy to grow by 1.9% in 2024 — much more muted, but not a recession by any means.
The bottom line: Growth hasn't come to a complete stop. Instead, it's showing the type of moderation central bankers see as necessary to cool inflation.
