CEO Economic Outlook Brightens a Little in Q3

After nine consecutive quarters of pessimism, U.S. business leaders are looking forward to positive changes in the next six months. The Business Roundtable on Wednesday released the results of its third-quarter CEO economic outlook survey, reporting an overall index score for the quarter of 64.0, up by more than 85% compared with a second-quarter index score of 34.3. The second-quarter reading was the lowest since the second quarter of 2009.

The less-good news is that chief executive officers in the survey are less sanguine about a quick recovery. In the Roundtable’s second-quarter survey, more than half said they expected their businesses to recover to pre-pandemic levels by the end of next year. Now, just 40% expect a recovery to materialize that soon. An equal percentage said they don’t expect business conditions to improve until 2022 or later.

Regarding employment, just over a third (34%) expect their company’s employment to decrease over the next six months, a sharp improvement from 46% in the second quarter. Nearly a third (31%) expect employment to increase, compared to just 22% who previously forecast an increase.

The capital spending outlook also improved, with 32% of CEOs forecasting an increase in the next six months, up from 18% in the second quarter, and 34% forecasting a decrease, down from 46% previously.

Sales also are looking better over the next six months. More than half (57%) of CEOs expect sales to rise and 21% expect them to decline, compared to the second-quarter results showing that 45% expected sales to increase and 43% expected them to decline.

Walmart CEO and chairperson of the Business Roundtable, Doug McMillon, urged “the Administration and Congress to come back to the negotiating table and pass more legislation to further ease the economic challenges American workers, small businesses and suppliers are experiencing.”

Joshua Bolten, president and CEO of the Roundtable, noted that the outlook had improved, thanks in part to the actions policymakers took earlier this year. He continued, “But further major support from the federal government is necessary to prevent economic recovery from being derailed. Failure to act, along with the lack of comprehensive and coordinated efforts to stop the spread of COVID-19, would impose long term damage on the U.S. economy, hurting most the workers and small businesses least able to absorb the blow.”

The 149 CEOs who responded to the Roundtable’s survey expect the U.S. economy to contract by 2.4% in 2020, considerably better than the 3.8% decline predicted in the second quarter. In its latest forecast of global economic growth for this year, the Organisation for Economic Co-operation and Development (OECD) forecasts that the U.S. economy will shrink by 3.8% this year and that the global economy will contract by 4.5%.