CEOs See U.S. Economy Expanding in 2014

Chief executive officers in the U.S. anticipate 2014 gross domestic product growth of 2.3 percent, which represents a weaker expansion compared with past economic recoveries, according to a survey Tuesday from Washington-based Business Roundtable.

The CEO Economic Outlook Index, which accounts for expectations of investment, sales and hiring, advanced to 95.4 in the second quarter, the most optimistic since the first quarter of 2012, from 92.1 the prior quarter.

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According to the survey, in the next six months, 44 percent of CEOs expect to ramp up capital investment. That is down from 48 percent who said so last quarter. The 43 percent who said they expect to hire more employees is up from 37 percent.

“CEO expectations for both investment and growth remain well below the potential of the U.S. economy and below what we should be experiencing at this stage of a recovery,” said Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T Inc., in a statement. “Congress and the administration must focus on policies that drive economic growth, including tax reform, immigration reform, trade expansion and long-term fiscal stability.”

In response to a special question about short-term tax policy, 77 percent of business heads said the passage of business tax extenders legislation such as research and development credits, would “improve the investment climate for their company.”

Earlier this month, Business Roundtable put out a report on the economic benefit of comprehensive immigration reform and, citing the Bipartisan Policy Center, noted that reform would increase GDP by 4.8 percent during the next 20 years and decrease federal deficits by $1.2 trillion.

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That would be a boost from a slow start to 2014. The economy contracted in the first quarter for the first time in three years, figures from the Commerce Department showed May 29, and weaker-than-expected health care spending could push the decrease down even more. A revised figure will come out June 25.

Federal Reserve Chair Janet Yellen and other economists blamed the bulk of the slowdown on “transitory factors,” like the unusually harsh winter, and she has said she anticipates “solid growth” in the second quarter.

“A faster rate of economic growth this year should be supported by reduced restraint from changes in fiscal policy, gains in household net worth from increases in home prices and equity values, a firming in foreign economic growth, and further improvements in household and business confidence as the economy continues to strengthen,” she said in May 7 testimony before the Joint Economic Committee in Washington.

Results of the survey were collected from 131 member Business Round Table CEOs between May 4 and June 14.