CEOs: Washington Gridlock Is Causing Job Losses

The fiscal cliff, Europe, and an Asian slowdown are all making CEOs cautious.


The people in America's corner offices are feeling a little shaky these days.

In the second quarter of 2012, the outlook of chief executive officers regarding hiring, sales, and capital spending at their companies have all taken a turn for the worse—and employment is looking grimmest of all. According to a survey from the Business Roundtable, an association of CEOs of U.S. companies, 75 percent of CEOs foresee an increase in sales in the next six months, a decline of 6 percentage points from last quarter's survey. Far fewer, 43 percent, foresee an increase in capital spending, representing a 5 percentage point decline from the previous quarter. And the smallest amount, 36 percent, expect their employment to grow, down 6 percentage points from the first quarter.

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"While expectations are for a continued slow expansion, the results reflect member CEOs' continuing concern over obstacles to a stronger economic recovery," said Boeing CEO and Business Roundtable Chairman Jim McNerney in a call with reporters. In particular, he says that these concerns stem from uncertainty surrounding the so-called "fiscal cliff" of expiring tax cuts and government spending cuts scheduled for the end of 2012, in addition to continued worries about the euro zone and slowing growth in Asia.

Even though the fiscal cliff is still half a year away, McNerney said that it is already impacting hiring decisions.

"There's no way to approach the prospect of sequestration without hedging a bet," he said.

At Boeing, a major aerospace and defense corporation that could be affected significantly by scheduled government spending cuts, "there are employment adjustments downward that are significant in anticipation of sequestration," said McNerney.

"I think anybody in the aerospace industry would give you the same answer," he added.

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The survey signals a change of direction in CEOs' economic outlook. The first-quarter 2012 outlook for sales, capital spending, and hiring had all improved from the fourth quarter of 2011.

The CEO Economic Outlook Survey Index, a composite measure of expectations for sales, capital spending, and employment, also declined, from the first quarter's 96.9 to 89.1. While this is a marked improvement from the upper-70s readings in the second half of last year, it is a nearly 20-percent decline from where it in the second quarter of 2011.

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However, the index ranges from -50 to +150, and a reading above 50 signals economic expansion.

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at