The chief executives of biggest U.S. companies downgraded their growth outlook for the U.S. economy for a seventh straight quarter amid lingering recession and trade-war fears.
The Business Roundtable’s index of the CEOs’ outlook fell 2.5 points to 76.7 in the fourth quarter, which remains below the historical average and indicates moderation in the pace of economic growth in the next six months, CNBC reported.
The group also said in its first forecast for 2020 that members see just 2.1% growth next year, near the Federal Reserve’s GDP estimate of 2%.
The economy is set to grow in the fourth quarter at a 2% annual pace, according to the Atlanta Fed.
“CEOs are justified in their caution about the state of the U.S. economy,” Business Roundtable President Joshua Bolten said in a statement cited by CNBC. “While we have achieved a competitive tax environment, uncertainty surrounding trade policy and slowing global growth are creating headwinds for business. Lawmakers should expand, not restrict, trade to help boost U.S. economic potential.”
Meanwhile, most senior finance executives at U.S. businesses believe the U.S. will be in an economic recession by the end of 2020, and 76% predict a recession by mid-2021, according to fourth-quarter results from the Duke University/CFO Global Business Outlook.
But, even with a recession on the horizon, the U.S. firm CFOs lead the world in terms of optimism about the general business environment, Bloomberg explained.
At the company level, firms are taking steps to mitigate the effects of a recession by increasing their cash holdings.
“Hoarding cash and reducing debt are the most obvious tactics to dull the blow of a recession,” said Campbell Harvey, professor at Duke University’s Fuqua School of Business.
Ironically, sentiment among small U.S. businesses climbed by the most in more than a year as more owners said profit trends are looking up and that it’s a favorable time for expansion, adding to signs that a key part of the economy is holding up in the fourth quarter, Bloomberg also reported this week.
The National Federation of Independent Business optimism index rose 2.3 points in November to a four-month high of 104.7, topping all estimates in a Bloomberg survey of economists that had called for 103.
The composition of the report released Tuesday showed that earnings trends were the biggest driver of the gain, posting the biggest increase in almost two years, though the overall rise was broad-based as seven of 10 components advanced.
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