The chief executives of the nation's biggest companies downgraded their outlook for the U.S. economy for a seventh straight quarter as angst over trade relations continued to plague C-suites across the country in the last months of 2019.
The Business Roundtable's index of the CEOs' outlook fell 2.5 points to 76.7 in the fourth quarter, which remains below the historical average and indicates moderation in the pace of economic growth in the next six months.
The group also said in its first forecast for 2020 that members see just 2.1% growth next year, near the Federal Reserve's GDP estimate of 2%. The economy is set to grow in the fourth quarter at a 2% annual pace, according to the Atlanta Fed.
"CEOs are justified in their caution about the state of the U.S. economy," Business Roundtable President Joshua Bolten said in a statement. "While we have achieved a competitive tax environment, uncertainty surrounding trade policy and slowing global growth are creating headwinds for business. Lawmakers should expand, not restrict, trade to help boost U.S. economic potential."
The association's indexes for sales and capital investment over the next six months also held below their long-term averages: Sales increased 7 points to 98.6, while investment sank 8.9 points to 64.5. The index for hiring saw the smallest drop, falling 5.5 points to 67.1, still above the index's historical average.
The Roundtable, whose chairman is J.P. Morgan CEO Jamie Dimon, blamed tension between the U.S. and its trading partners for its renewed caution. The nonprofit association members include General Motors CEO Mary Barra, Johnson & Johnson CEO Alex Gorsky and Walmart CEO Doug McMillon.
"Free and fair trade agreements are vital to economic prosperity for American workers, families and communities. Nearly 39 million American jobs—one in every five—depend on international trade," Union Pacific CEO Lance Fritz said in a statement accompanying the report..
"Because growth in trade-dependent jobs far outpaces job growth as a whole, we urge lawmakers to engage in more trade agreement negotiations."
Corporate executives have been among the most vocal advocates for a new North American trade agreement while also urging the Trump administration to curb its rhetoric against China and hold off on tariffs.
Though House Speaker Nancy Pelosi and top Trump administration officials signaled this week that the United States-Mexico-Canada Agreement is nearing passage, questions remain over whether the U.S. will move forward with proposed tariffs against Chinese imports on Sunday.
The White House further fueled Wall Street's trade angst last week when President Donald Trump announced that he would immediately restore tariffs on steel and aluminum imports from Brazil and Argentina.
This quarter's Roundtable survey asked members to rank the greatest cost pressures facing his or her company. Forty-eight percent of CEOs cited labor as the top cost pressure on their business in the fourth quarter, reflecting "strong real wage growth for U.S. workers and a healthy U.S. job market" due in part to the 2017 tax cuts.
Fourteen percent identified regulations and 11% identified materials as their top cost pressures.
Members of the Roundtable have tackled controversial issues over the last year, ranging from pressure on lawmakers to draft comprehensive privacy legislation to (in the case of Walmart) the halt of all sales of handgun and short-barrel rifle ammunition.
In August, the group's members issued a statement that attempted to redefine the purpose of a corporation and asserted that shareholder value is no longer their main objective.
The Roundtable, founded in 1972, has issued several statements on the philosophy of corporate governance since the late 1970s, but said this new definition of "supersedes" past statements and outlines a "modern standard for corporate responsibility."
"Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term," Dimon said in August. "These modernized principles reflect the business community's unwavering commitment to continue to push for an economy that serves all Americans."
— CNBC's Kayla Tausche and Lauren Hirsch contributed reporting.