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CEOs downbeat on growth outlook, new survey shows

Worker jobs
Scott Eells | Bloomberg | Getty Images

The U.S. economy is "stuck in neutral" and not likely to get in gear within the next six months, according to a survey of corporate CEOs released Monday.

The report from the Business Roundtable said that the group expects to see lower sales over the next six months and plans to keep hiring at roughly the same pace over the same period.

They also see little pickup in capital spending, which has slumped this year, creating a headwind for the economy.

The latest survey extends the lackluster outlook that CEOs have been reporting for the past year.

And the group places much of the blame for slow growth on Washington.

"The continued lack of action on an aggressive pro-growth policy agenda that includes tax reform, trade expansion and a smarter approach to federal regulation contributes to an economy that continues to perform below its potential," said Caterpillar CEO Doug Oberhelman, the group's chairman, in a statement.

The groups's latest survey finds that expectations for sales over the next six months declined by 9.3 points from a similar survey taken three months ago, while expectations for hiring declined by 3.4 points. Plans for capital spending ticked up slightly by 0.8 point compared with the second-quarter survey.

The CEOs estimate that real GDP will rise by 2.2 percent for all of 2016, slightly higher that their 2.1 percent second-quarter estimate.

The report from the CEOs echoes the sentiments of a national group of business economists.

In a separate survey Monday, the National Association for Business Economics pared back their already weak forecast for the rest of this year.

The business economists expect the U.S. economy to avoid a recession for at least the next two years, but just barely. Their median estimate sees gross domestic product growing at an annual rate of 1.5 percent in 2016, down from their June forecast of 1.8 percent. Their median outlook for next year sees growth picking up a bit, to 2.3 percent average annual growth.

The economists also see the pace of hiring slowing; they've cut their June forecast of 201,000 jobs per month to just 185,000 monthly payroll gains in the latest survey. They expect payroll growth to slow to 168,000 a month next year, with the jobless rate falling to 4.6 percent by the end of next year.

This time, the main reason the economists cited in their scaled-back forecast was the recent slowdown in business investment, as companies have pulled back on spending for new equipment or new construction.

Some of that spending decline may be due to uncertainty surrounding the presidential campaign. Half the group said concerns about the outcome of the November election have been "modestly negative" for the economy this year.

Some 56 percent said they think a win by Democratic candidate Hillary Clinton would be "mostly neutral" for their growth outlook; while 60 percent said a Donald Trump presidency would be "unfavorable" for the forecast.

The third-quarter 2016 survey was conducted between August 3 and August 24; responses were received from 144 member CEOs. Business Roundtable members lead companies with $7 trillion in annual revenues and nearly 16 million employees.