Optimism among U.S. CEOs, while remaining near record highs, was tempered in the second quarter due to increasing uncertainty over the Trump administration’s trade policies, a new survey shows.
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The Business Roundtable’s CEO Economic Outlook for the second quarter showed optimism among CEOs – a combined measure of expectations for sales, capital spending and hiring plans over the next six months – fell by 7.5 points from the previous quarter. This represents the first decline the index has seen in nearly two years, as hiring and spending plans, as well as sales expectations, all fell.
The most recent reading of 111.1, however, is still well above the historical average of 81.2.
CEO expectations for economic growth in 2018 was 2.7%, slightly lower than last quarter’s forecast of 2.8%.
Among the main concerns weighing on executives’ minds was trade. Nearly all respondents said foreign trade retaliation potentially leading to lower exports was either a moderate or serious risk. About 90% said trade tensions leading to higher consumer costs and lower U.S. economic growth was a risk.
On Tuesday morning, Mexico issued retaliatory tariffs on U.S. steel and agricultural products. It announced it will impose a 20% tariff on U.S. pork, apple and potato imports and 20% to 25% levies on cheeses and bourbon.
Last week, the U.S. imposed steel and aluminum tariffs on the European Union, Mexico and Canada. The White House said it lifted temporary exemptions granted to its NAFTA partners over delayed negotiations.
Meanwhile, discussions with China appear to have stalled, as Beijing warns it will go back on a promise to buy more American goods if the U.S. imposes tariffs on $50 billion worth of Chinese goods by a deadline next week.