Top U.S. executives have less confidence in the business outlook now than at any time in the past three years - and a key reason is fear of gridlock in Washington over the fiscal deficit and tax policy.
The uncertainty, coupled with slowing demand in Asia and Europe, is forcing corporate leaders to postpone decisions on major investments and hiring, and hurting sales of everything from textbooks to telephone lines.
"If we don't deal with the fiscal cliff and don't deal with predictability on taxes for both citizens and business, with the rest of the world in a struggling state, this is really bad for us," John Chambers, CEO of network equipment maker Cisco Systems Inc (CSCO.O), told Reuters on Tuesday.
Some 34 percent of U.S. CEOs plan to cut jobs in the United States over the next six months, up from 20 percent a quarter ago, according to a Business Roundtable survey released on Wednesday. Only 30 percent plan to raise capital spending, compared with 43 percent previously.
The group's index of CEO confidence fell to its lowest point since the third quarter of 2009, when the United States had just emerged from its worst recession in 80 years.
The main culprit is the fiscal cliff -- Washington's self-imposed year-end deadline to agree on a plan to shrink the federal budget or trigger $600 billion in spending cuts and higher taxes that were put in place last summer.
The sharpest pain would be felt by the defense and healthcare sectors, which face direct funding cuts. But any resulting slowdown could send shockwaves across the economy.
Another survey, by Deloitte, found that chief financial officers' view of business prospects had also darkened in the current quarter. Some 80 percent of U.S. CFOs surveyed by the consultancy said the economy had stalled or was about to stall.
Read more: http://www.reuters.com/article/2012/09/27/us-usa-economy-fiscalcliff-idUSBRE88P1PX20120927
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