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Economic Contraction Predicted in Second Half of 2015 06-16-15 | News

Economic Contraction Predicted in Second Half of 2015

Corporate executives have revised their numbers downward in the areas of sales, investment and hiring for the remainder of this year.

American chief executive officers are not as optimistic about the economy in the remainder of 2015 as they were earlier in the year, according to the Business Roundtable.

In the Business Roundtable's most recent Economic Outlook Index, CEOs offered their projections for sales, and plans for capital spending and hiring over the next six months. This composite index declined from 90.8 in the first quarter of 2015 to 81.3 in the second quarter.

Certain subcategories within the Economic Outlook Index are expected to drop as well. Sales, investment and hiring would decrease 9.8 points and 8.9 points, respectively, in the second half of 2015, that is, if the CEOs' forecast holds true. Moreover, they predict gross domestic product growth of 2.5 percent in 2015. That is down from the 2.8 percent GDP growth the CEOs had forecast in a first-quarter survey.

The Business Roundtable noted that its most recent survey was completed before the Commerce Department released a report in which its first-quarter GDP was revised downward to a negative 0.7 percent.

Seventy percent of the respondents said in the second-quarter survey that they believe sales would rise in the next six months, down from 80 percent in the first quarter. And 35 percent said they expect spending to increase over that same period, down from 45 percent in the previous survey.

"Of particular concern is the downward movement of our CEOs' investment plans," said Randall Stephenson, chairman of the Business Roundtable and CEO of AT&T Inc. "Business investment is a key driver of economic expansion and job growth."

The CEO Economic Outlook survey has been done quarterly since the fourth quarter of 2002. Corporate executives provide data to the Business Roundtable that is used to compile each quarterly survey.