A recent survey has found that most big businesses plan to increase their sales. Yet, while they expect sales to improve, the percent of CEOs who expect to hire in the near future has actually fallen.
Exploring Survey Data
According to the Business Roundtable’s quarterly survey, two-thirds of the CEOs of the nation’s largest corporations expect to see an increase in their sales over the next six months. Furthermore, 34 percent report that they will increase their capital spending. Yet, while this indicates an improvement in both sales and capital spending, the same survey found that the hiring plans for these CEOs has weakened with only 29 percent expecting to increase the size of their workforce over the next six months. This is down significantly from the 35 percent who expected to increase their workforce last quarter. In addition, 38 percent of respondents reported intentions to reduce employment.
Overall, the Business Roundtable CEO Economic Outlook Index rose from 67.5 to 69.4. While an increase is certainly good news, this is still one of the lowest numbers the index has seen in three years. Furthermore, it is well below the index’s 14-year average of 79.9.
A Stalling Economy
While the index saw a minor increase, the results of the survey seem to indicate an economy that continues to lack momentum. As such, many experts are calling for Congress and the administration to enact policies that will help to increase job creation and economic growth. Among these initiatives include tax reform, ratifying the Trans-Pacific Partnership and establishing a smart regulatory environment. While these changes are not likely to occur this year, they may take place when a new president takes office.
So far, the 2016 presidential campaign has involved a number of attacks on big business being made by both Democrats and Republicans. While this talk has not had much of an impact on CEOs and their plans for their companies, they are gearing up to try to convince members of Congress to expand exports through trade deal like the Trans-Pacific Partnership. According to supporters of TPP, the deal will help thousands of small businesses working within the supply chains of big businesses.
Putting Money in the Economy
The results of the survey seem to align with what has actually been taking place in the economy. Last year ended with poor economic growth of just 2.4 percent for the year. This is the same amount of growth that was achieved in 2014. Interestingly, the problem is not a lack of consumer spending money. Rather, business investment fell in the fourth quarter as companies spent less on equipment and structures. Furthermore, low oil prices continued to depress investments in drilling.
While the national economy may not have the momentum that some economist might like to see, the housing market in Southern California is going strong with prices continuing to grow.
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(all data current as of 10/17/2017)
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