Corporate chief execs plan to be cautious with their cash--and the effects could trickle down to small business owners.
Economic optimism is in short supply, if you ask corporate CEOs. In fact, they're done spending for the rest of the year--and that doesn't bode well for smaller businesses.
Fewers CEOs plan to spend or hire in the next six months, according to a survey released Wednesday from the Business Roundtable, an association of 150 CEOs who run large-scale companies. Only 43% of Roundtable chief execs (down from 47%) plan to invest in large goods, such as machinery and computers, before the end of the year. And just 36% plan to add headcount (down from 42% six months ago).
The slowdown in spending could have repercussions for business owners. Business Roundtable says that its members generate an estimated $420 billion in sales for small- and medium-sized companies, according to its website.
The group’s president and former Michigan Governor John Engler told CNBC in an interview that all 150 CEOs (who represent a cross section of the economy) showed “a softening of confidence and outlook,” in this quarter’s survey responses.
The results reflect “growing uncertainty as the end of the year approaches, the fiscal cliff looms, and we watch things play out in Europe,” Engler continued.
Boeing CEO and Business Roundtable chairman Jim McNerney echoed Engler's statements on a conference call with reporters Wednesday. McNerney also said CEOs seem wary of economic obstacles surrounding tax cuts and big spending cuts, according to CNBC.
“Companies are holding back,” McNerney said. “We don’t know how corporations, or individuals, or capital will be taxed. That is having an impact on the results you see here.”
MAEGHAN OUIMET is a business and culture reporter whose work has appeared in Boston Magazine and Rolling Stone. She covers technology start-ups and innovations from the San Francisco bureau for Inc.com. @MaeghanO