As Obama nudges on budget, CEOs gloomy on economy

President Barack Obama delivers remarks to members of the Business Roundtable during a meeting at their headquarters on December 5, 2012, in Washington, D.C. Obama spoke on the fiscal cliff negotiations and business relations.
Kevin Dietsch-Pool/Getty Images

NEW YORK U.S. chief executives are less optimistic about the economy, according to a survey released Wednesday. The survey also indicates that disagreements over the 2014 budget and raising the debt ceiling in Washington are making them cautious about hiring.

The Business Roundtable said that its quarterly index, which measures the economic outlook of CEOs from the largest U.S. companies, fell to 79.1 in the third quarter from 84.3 in the previous quarter. Any reading above 50 suggests expansion.

The group said that 50 percent of the CEOs surveyed said the stalemate in Washington is having a negative impact on their plans for hiring additional employees over the next six months. It released the survey the same day President Barack Obama addressed the group, arguing his case for budget flexibility and seeking their help to pressure Republicans to take a more moderate stance.

Of the CEOs surveyed, 32 percent said that they expect to increase hiring in the next six months. That's unchanged from the survey in the previous quarter. Forty-four percent said that there will be no change in their hiring plans, up from 42 percent in the second quarter. And 24 percent said that they expect to decrease hiring, down from 26 percent in the previous quarter.

"While U.S. business performance remains strong, as evidenced by robust recovery in the automotive sector, business leaders still see headwinds preventing a more sustained, robust recovery," said Jim McNerney, chairman of the Business Roundtable, in a statement. McNerney is also president, chairman and CEO of The Boeing Co., the aircraft manufacturer.

The CEOs surveyed said that they expect 2013 gross domestic product to grow at a 2.2 percent annual rate, matching expectations reported in last quarter's survey.

A smaller percentage of CEOs expect an increase in sales. Seventy-one percent of respondents said they expect an increase in their company's sales in the next six months, down from 78 percent in the last survey. Eight percent expect a sales decrease, up from 7 percent, while 21 percent expect no change, up from 15 percent in the previous quarter.

The Business Roundtable is an association that represents over 200 CEOs. The survey results are based on 134 responses received between Aug. 16 and Sept. 6. The survey has been conducted for the past 11 years.

Obama, facing a budget showdown with Congress, called on members of the Roundtable to use their influence with Congress to avoid a potentially damaging confrontation over the nation's debt ceiling.

Obama reiterated his vow not to negotiate with Republicans over raising the borrowing limit, which the government is about to hit as early as next month. And he blamed "a faction" of the Republican party that he said is trying to eliminate his health care law by threatening a government shutdown or a default on the debt.

"We're not going to set up a situation where the full faith and credit of the United States is put on the table every year or every year and a half and we go through some sort of terrifying financial brinksmanship because of some ideological arguments that people are having about some particular issue of the day," Obama told members of the group. "We're not going to do that."

He argued that the modest economic recovery would be hurt if Republican lawmakers cannot work with Democrats to pass a stopgap spending measure to keep the government operating after the fiscal year ends Sept. 30.

After that, Congress must find a way to raise the current $16.7 trillion borrowing limit, expected to hit its ceiling sometime in mid- to late October.

Obama also urged his audience to appeal to congressional Republicans to resolve budget differences in ways that "do not promise apocalypse every three months."