Business leaders respond to positive economic signs

Sales, hiring and capital expenditures are expected to rise, according to a Business Roundtable survey.    Chief executive officers of American businesses are more optimistic about prospects for the U.S. economy in the first six months of the year than in 2014 based on planned sales, capital spending and hiring, according to the latest quarterly survey by the Business Roundtable.
   The expectation among the 120 respondents is for Gross Domestic Product to grow 2.8 percent in 2015. Last year, U.S. economic activity expanded 2.4 percent compared to 2.2 percent in 2013.
   The first quarter CEO Economic Outlook Index is up 5.7 points to 90.8 points from the fourth quarter of 2014. The long-term average of the index is 80.5.
   CEOs said they expected to increase capital expenditures, with the index up 9.2 points after three previous quarterly declines. Randall Stephenson, chairman of the Business Roundtable and chairman and CEO of AT&T, attributed the jump to passage by Congress of legislation to extend tax temporary tax breaks through 2014 because it gave companies more confidence to invest. Opponents say that the bill rewards past investment rather than encouraging it in the future and that many loopholes amount to corporate giveaways.
   CEO expectations for sales went up 7.4 points after two previous quarters of decline. Hiring expectations went up 0.4 percent after increasing 3.6 percent last quarter. 
   Job growth has been steadily improving, with the unemployment rate down to 5.7 percent and more than 250,000 jobs being created most months in the past year.    
   Despite the positive signs, “it’s clear that U.S. economy continues to perform below its full potential,” Stephenson said in a conference call with reporters on Tuesday.
   “We need to give more businesses the confidence to increase investment to create more good-paying, middle-class jobs and boost U.S. economic growth. That would happen if Congress and the Administration pass Trade Promotion Authority, as well as act on business tax reform, infrastructure investment and smart regulation that encourage and accelerate business investment,” he said.
   The Business Roundtable is actively encouraging Congress to pass Trade Promotion Authority legislation, which would give the president more power in free trade negotiations such as the Trans Pacific Partnership. Under TPA, Congress can help set the parameters of the U.S. position, but only vote up or down on any final agreement delivered by the president. The process is designed to give negotiating partners confidence that any agreement they sign with the United States will not be legislatively altered. The White House has not had trade promotion authority since 2007.
   Stephenson said businesses would hire more if there were more international trade opportunities, and that the TPA would open up markets and create more transparent trade rules.
   There appears to be broad bipartisan support for TPA and Stephenson was hopeful that Congress would pass a bill in the first half of the year, before lawmakers started to cast their eye toward election year politics in 2016.
   Tax reform would do the most to boost the economy, especially as “we don’t seem to be able to break through the 3 percent growth” barrier, the AT&T chief said.