The CEOs of America’s largest companies are increasingly disgruntled by the state of the US economy, which faces the duel of high inflation and rising interest rates.
The Business Roundtable announced this week that its CEO Economic Outlook Index fell 11 points in the fourth quarter to the lowest level in more than two years. Still, at 73, the index remains above the 50 expansion or contraction threshold.
“With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months,” General Motors CEO Mary Barra, who chairs the business roundtable, said in a statement Explanation.
The mood fell across the board. Hiring plans tumbled 17 points, revenue expectations 8 points and capital expenditure plans 7 points last quarter.
THESE BUSINESS TITANS RAISE ALERT ABOUT THE US ECONOMY
The biggest issues facing CEOs are rising labor and material costs, ongoing supply chain disruptions and pricing pressures from the energy sector, according to the survey, which was conducted between October 31 and November 28. It included responses from 142 CEOs.
That federal reserve has raised interest rates at the most aggressive pace since the 1980s to fight inflation. Policymakers have already approved six simple rate hikes, taking the federal funds rate from near zero to a range of 3.75% to 4% in March.
FED’S POWELL SIGNALS MINOR RATE HIKES COULD START IN DECEMBER
Although officials at their December meeting indicated a preference for a slightly lower rate hike, they also signaled an appetite for a higher top rate.
“The time to slow the pace of rate hikes could come as early as the December meeting,” Fed Chair Jerome Powell said during a speech in Washington last week. “Given our progress in tightening monetary policy, the timing of this moderation is far less important than how many more rate hikes we will need to control inflation and how long it will be necessary to keep monetary policy at accommodative levels . “
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However, as inflation remains persistently high, economists generally expect the Fed to trigger a recession with higher interest rates, which could force consumers and ultimately businesses to rein in spending.
Bank of America, Goldman Sachs and Deutsche Bank are among the big Wall Street firms forecasting a downturn over the next year, though they remain uncertain about the severity.