CEOs less optimistic about economy

The nation’s top business executives are less optimistic about the direction of the U.S. economy for the rest of the year, with budget, tax and debt-limit decisions looming in Washington.

CEOs’ overall projections for sales, capital spending and hiring over the next six months declined 7.2 points, to 74.1, in the July-September quarter, from 81.3 in the April-June period, according to the Business Roundtable economic outlook survey released on Tuesday.

Business leaders intend to press lawmakers on Capitol Hill this week to avoid gridlock on extending expiring tax provisions, keeping the government funded and working toward a plan to raise the debt ceiling.

{mosads}“Predictability is critical to spur investment and unlock economic expansion and job growth,” said Randall Stephenson, chairman of Business Roundtable and chairman and CEO of AT&T.

“Congress and the administration need to work together to pass a prudent spending plan and renew expired tax provisions,” he added. “U.S. workers cannot afford the instability that comes with inaction.”

Stephenson said that business leaders want assurances that policymakers will steer clear of brinkmanship and keep the federal government running when the new fiscal year begins on Oct. 1.

Without locked-in policy guarantees, CEOs’ cautious attitude could turn defensive, he said.

“All of this is a cumulative effect,” he told reporters on a conference call. “We can’t control China or international markets but can control our own variables.”

Roundtable President John Engler predicted that Congress would eventually pass a reauthorization of the Export-Import Bank’s charter that expired July 1, though he wasn’t sure how lawmakers would get that done.

Engler argued that there is enough support in the House and Senate for a stand-alone measure but that there is no clear path to push a bill to the floor. The bill also could hitch a ride on another measure, such as a spending or transportation legislation.

On Monday, the Roundtable sent a letter to House and Senate leaders urging them to pass a multi-year bill reviving the bank, warning of harm to U.S. firms and the possible loss of a hundreds of thousands of jobs.

General Electric on Tuesday announced that it is moving about 500 jobs from Texas, South Carolina, Maine and New York to France, Hungary and China because the Ex-Im Bank can’t take on any new business while its fate remains in limbo.

Ex-Im’s charter expired when Congress failed to move forward any legislation.

GE said that it has started talks with several foreign export credit agencies to secure financing.

Rep. Paul Tonko (D-N.Y.) said he is “disgusted” by the job losses that will hit his New York district and blamed House Republican leadership for bowing to the party’s conservative wing.

“Let me be clear: the sole reason this work cannot be performed in Schenectady is that House Republicans have failed to renew the Export-Import Bank,” he said in a statement.

Tonko said that Speaker John Boehner (R-Ohio) and his team “have been held hostage by an extreme Tea Party element” in the House and have ignored warnings from their colleagues, economists and business groups such as the Roundtable and the U.S. Chamber of Commerce that failing to reauthorize Ex-Im would weigh on the nation’s economy.

The survey also showed that CEOs expect economic growth of 2.4 percent for the year, a slight 0.1 percentage point decline from last quarter’s projection.

Expectations for sales fell 11.1 points, while hiring plans for the next six months decreased 7.9 points.

Plans for capital spending slipped by a more modest 2.4 points, the second consecutive decline.