WASHINGTON–A composite index of corporate CEOs’ plans for the next six months has hit its lowest reading since the second quarter of 2009.
The Business Roundtable is reporting its Q2 2020 CEO Economic Outlook Survey, which measures CEOs’ plans for capital spending and hiring and expectations for sales over the next six months, finished with a score of 34.3, a decrease of 38.4 points compared to Q1 2020. This is the lowest reading of the Index since Q2 2009, but it remains above the record low of -5.0 reached in Q1 2009, the CEO Roundtable said.
“The new value of 34.3 signals that an economic contraction is underway, which is consistent with the National Bureau of Economic Research’s recent determination that the U.S. economy has entered a recession,” the Business Roundtable said. “It reflects the disruptions to business caused by the COVID-19 virus and the global pandemic, and shows the effects of business and factory shutdowns, especially in March and April.”
As the public health crisis continues, Business Roundtable companies have worked to ensure safe and healthy work environments as more employees return to work. They are also taking necessary steps for continued economic recovery.
According to the Business Roundtable, a series of special questions was asked with this quarter’s survey, and CEO responses show companies are taking strong action to keep employees and customers safe.
The Findings
Among the findings:
- 100% of CEOs have adopted or plan to adopt physical distancing measures at their facilities
- Nearly all CEOs have adopted or plan to adopt routine cleaning and disinfecting, are promoting face coverings, are actively encouraging sick employees to stay home, and are protecting vulnerable employees through supportive policies and practices
- More than two-thirds of CEOs have expanded wellness support and behavioral health services for their employees
- 95% of CEOs have expanded flexible work arrangements within their companies.
Looking Forward
When asked when their company would recover to pre-COVID levels, most expect business conditions to recover by the end of 2021, although 27% do not expect recovery for their companies until after 2021, Business Roundtable reported.
“Our battle against COVID-19 is far from over, and our top priority remains the health and safety of our employees, customers and communities we serve,” said Doug McMillon, chairman and CEO of Walmart and chairman of Business Roundtable. “We urge lawmakers at the federal, state and local levels to coordinate as much as possible to control further spread of this virus. Business Roundtable will continue working with lawmakers and public health officials to ensure all Americans, especially those most vulnerable, benefit from policies that will boost economic recovery, while prioritizing public safety.”
Other Components
Other components of the Index included:
- CEO plans for hiring decreased by 39.8 points to 26.3, 32.6 points below the sub-index’s historical average of 58.9
- CEO plans for capital investment decreased by 37.3 points to 25.0, 51.3 points below the sub-index’s historical average of 76.3
- CEO expectations for sales decreased by 38.4 points to 51.5, 60.6 points below the sub-index’s historical average of 112.1
- In their second estimate of 2020 U.S. GDP growth, CEOs projected a 3.8% contraction for the year, which dropped 5.8 percentage points from last quarter’s estimate of 2% growth