CEOs Are Pessimistic Heading Into The New Year | Eastern NC Now

    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Corporate leaders have lackluster expectations for the new year as macroeconomic headwinds continue, according to data from Business Roundtable's CEO Economic Outlook Survey.

    Phenomena such as persistent inflation and bottlenecked supply chains caused the index to fall from 84 in the third quarter of 2022 to 73 in the fourth quarter of 2022, marking the first decline below long-run averages since the third quarter of 2020. Executives reported a 17-point decrease in hiring plans, a 7-point reduction in plans for capital investment, and an 8-point drop in expectations for sales.

    "With continued supply chain challenges and inflation uncertainty, many CEOs remain cautious about domestic plans and expectations for the next six months," Business Roundtable Chair and General Motors CEO Mary Barra said in a press release. "Sound policy action in the short term will yield long-term economic benefits and lay a solid foundation for our growth and competitiveness."

    When asked about the greatest cost pressures facing their companies, 49% identified labor costs, while 15% reported material expenses and 14% cited supply chain disruptions. Participation in the labor force has trailed levels seen before the lockdown-induced recession, contributing to imbalances between the supply and demand of workers. The number of positions available in the job market continues to exceed the number of workers available to fill them.

    Robust employment will likely cause Federal Reserve officials to persist with decisions to hike target interest rates. Some analysts have criticized policymakers for causing harm through their excessive zeal to manage inflation soon after a prolonged increase in the money supply.

    Business Roundtable CEO Joshua Bolten noted that the central bank "has been pumping the brakes to rein in inflation, and the survey results are unsurprising in that context." He encouraged lawmakers to "undertake pro-growth policies" such as expanding research and development commitments and reforming the energy permitting system to catalyze infrastructure projects.

    Executives forecasted gross domestic product to witness 1.2% growth in 2023, a figure well below the most recent pre-recession 2.3% growth in 2019. The survey conducted by Business Roundtable during the fourth quarter of 2021 showed that executives had predicted 3.9% growth for this year; however, the economy contracted in the first two quarters of 2022, implying that the United States entered a technical recession.

    Several companies have announced widespread dismissals in recent months. Technology conglomerates such as Amazon, Microsoft, and Tesla have announced hiring pauses or layoffs for their corporate offices, citing broader economic uncertainty and the probability of a prolonged contraction. Media and entertainment firms such as Disney and Gannett experienced a similar bout of dismissals. Amazon and FedEx recently revealed efforts to dismiss workers ahead of the holiday season, which is typically a busy time for companies involved in the sale and transportation of consumer goods.

    The most recent payroll and unemployment data from the Bureau of Labor Statistics revealed that companies added positions in November even as average hourly earnings rose 5.1% year-over-year. The most recent price level report from the Bureau of Labor Statistics, however, showed 7.7% headline inflation as of October. Inflation data has not yet been released for November.

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