American CEOs downgraded their growth expectations for the economy this year and said they are pulling back on hiring as experts remain fearful of a global economic slump.
A plurality of corporate leaders expect to cut jobs over the next six months, an increase from the same survey in the fourth quarter of 2015. When polled at the end of last year, 35 percent expected to increase hiring, slightly above 34 percent who expected to slash jobs, according to Business Roudtable’s CEO Economic Outlook Survey.
CEOs think the current economy is underperforming and lacks strong fundamentals for long-term growth. Growth expectations were slashed by corporate leaders to 2.2 percent from 2.4 percent in the fourth quarter of 2015. Their overall economic outlook is among the worst since the financial crisis, reports The Wall Street Journal.
CEOs generally agreed in the Business Roundtable survey the controversial Trans-Pacific Partnership (TPP) would be a boon to the financial system and help struggling American companies. (RELATED: Trump’s Tough Talk On Trade Spooks Japan)
“Mixed expectations for near-term sales, investment, hiring and growth point to an economy that continues to lack momentum,” Doug Oberhelman, chairman and CEO of Caterpillar Inc. and chairman of Business Roundtable, said in Tuesday’s report. “These results only reinforce the need for Congress and the Administration to act this year to enact policies that boost job creation and economic growth, such as quickly ratifying the TPP, modernizing America’s outdated business tax system, and embracing a smart regulatory environment.”
The survey comes on the heels of a report from Morgan Stanley Tuesday downgrading growth forecasts for the S&P 500. Morgan Stanley analysts also advised their investors to sell stocks despite the recent market rally, as the firm itself increases its cash and government bond holdings, reports Market Watch.
“Weaker growth forecasts and rising political risk lead us to close our positive tactical stance and lower exposure in global equities,” Morgan Stanley analysts said. “The probability of a global recession has risen.”
Retails sales in the U.S. are down and adding to doubts over the strength of the U.S. economy. February sales showed a 0.1 percent decrease in consumer retail purchases and January numbers were revised lower from a 0.2 percent increase to a 0.4 percent decrease in purchases, reports Bloomberg.
Experts fear this rebukes economist hopes that increases in consumer spending propelled by low energy prices would help boost growth in 2016. The Federal Reserve meets Wednesday to discuss whether the U.S. economy can handle another interest rate hike this year.
Scott Brown, chief economist at Raymond James Financial, told Bloomberg, “We’re seeing higher rents, higher healthcare expenses, so that may be offsetting a lot of the benefit of lower gasoline prices.”
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