The nation’s top business executives say congressional passage of an expansive Pacific trade agreement will rev up economic growth and needs to get done this year.
The Business Roundtable’s first quarter economic outlook released on Tuesday showed that the mood among CEOs remains mixed, which is a reflection of an underperforming economy that could be boosted by action on the Trans-Pacific Partnership (TPP) as well as overhauling the nation’s tax and regulatory frameworks.
{mosads}“Mixed expectations for near-term sales, investment, hiring and growth point to an economy that continues to lack momentum,” said Doug Oberhelman, chairman and CEO of Caterpillar Inc. and chairman of BRT.
“These results only reinforce the need for Congress and the administration to act this year to enact policies that boost job creation and economic growth, such as quickly ratifying the TPP, modernizing America’s outdated business tax system and embracing a smart regulatory environment,” Oberhelman said.
Oberhelman said that U.S. business leaders would continue to “push as far and as fast as we can on the agreement now and again work with Congress and the administration to get a vote as soon as we possibly can and make sure we get this turned into law in 2016.”
A majority of CEOs said the TPP would have a positive effect on their ability to “grow my company and become more globally competitive” and to “expand U.S. operations.”
Congress is mulling the massive agreement and there is uncertainty surrounding whether lawmakers will vote on the TPP before Obama leaves office in early 2017.
John Engler, president of the BRT and the former governor of Michigan, said that despite the negative tenor on the campaign trail, especially about trade, that a new president will have to determine the best direction to achieve faster growth of around 3.5 to 4 percent.
“Well, you’re not going to get there unless you start making a lot of smart decisions,” Engler told reporters on a media call. “I don’t think that when you start making those smart decisions that you’re going to conclude that erecting trade barriers or canceling previously negotiated trade deals is a smart way to go, or keeping taxes high is a smart way to go, increasing regulations,” he said.
GOP front-runner Donald Trump has said he would rip up all existing trade agreements and start again.
Engler said that there is still some time before Democrats and Republicans anoint nominees so “we’ll see how this all shakes out.”
The BRT report said that CEO projections for sales and plans for capital spending and hiring over the next six months increased modestly to 69.4 from 67.5 in the first quarter.
Expectations for sales over the next six months increased by 8.5 points and plans for capital expenditures increased by 7.1 points, the report said.
Hiring plans declined by nearly 10 points from last quarter.
Estimates for growth for the year were revised down to 2.2 percent from the 2.4 estimate at the end of 2015.