Sales Will Rise, But Not Jobs, According to 2014 CEO Outlook

Mar 23, 14 Sales Will Rise, But Not Jobs, According to 2014 CEO Outlook

U.S. business executives are more optimistic now than they were in the last quarter, but note that policy changes are needed in order to get growth where it needs to be. On Tuesday, the Business Roundtable released its first quarter 2014 CEO Outlook Survey, which polls executives about their expectations for the coming year.

The biggest standout from the survey is that nearly three quarters of CEOs expect sales growth in the next six months. However, only 37% said that they planned to hire more American employees. On top of that, less than half indicated that they do not expect to increase capital spending during that time. GDP growth is expected to be around 2.4%, which is lower than normal.

“CEO expectations for overall economic growth in 2014 continue to be modest at best,” said AT&T Inc. Chief Executive Randall L. Stephenson. Projections for the growth rate are “much slower than what we’ve seen at this point in past recoveries, and it’s well below what our economy is capable of.”

While there are several factors that contribute to that trend, uncertainties about foreign markets and trade restrictions are certainly playing a role. Around 56% said that they would invest and hire more if Congress and the Administration were able to cooperate on business tax and immigration reform and make progress on free trade agreements. In addition, 70% said increased U.S. trade opportunities would help their business and more than 40% said they would hire more people with expansions in global trade.

The crisis in the Ukraine might also have an impact. “Obviously, anybody doing business in Europe is watching the situation very, very closely,” Stephenson said.

Perhaps the most telling statistic from the survey is the fact that 89% of CEOs expressed that government regulation has had either a moderately significant or significant material impact on their ability to invest and hire.

It is possible to think that government regulations are slowing down the sales cycle and, in turn, limiting businesses’ ability to grow. The sales cycle is the time needed from a first meeting with a potential client or customer to closing a sale. If there is lots of government red tape, particularly for foreign clients, that process will be dragged out and, at times, never concluded.

Though it might be a stretch to say that low growth projections are a bad thing, it is concerning that numbers are lower than where they should be. Over the coming months, it will be interesting to see the adjustments that both businesses and the government make to help boost the economy.

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