How Optimistic Are CEOs about Recovery?

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How Optimistic Are CEOs about Recovery?

By Thad Rueter - 06/29/2020
How Optimistic Are CEOs about Retail Recovery?
Walmart CEO Doug McMillon

When will retail and the larger economy stabilize?

Maybe by the end of 2021. Maybe not, at least going by new data. 

According to the Business Roundtable “Q2 2020 CEO Economic Outlook Survey,” most of the 136 CEOs surveyed for the report expected “conditions to recover by the end of 2021. However, 27% do not expect recovery for their companies until after 2021.”

The surveys were conducted between June 1 and June 22, and represent the latest attempt to get a handle on what’s coming next for retail amid the ongoing COVID-19 pandemic. The Business Roundtable is a diverse group of CEOs from various sectors of the economy, and the findings are not specific to retail but do reflect broader attitudes and trends that impact commerce. 

Like many of the previous reports, the findings are rather gloomy — though not hopeless.

The Business Roundtable survey report for the second quarter included what it called “a composite index of CEO plans for capital spending and hiring and expectations for sales over the next six months. This quarter the overall Index was 34.3, a decrease of 38.4 points compared to Q1 2020. This is the lowest reading of the Index since Q2 2009, but it remains above the record low of -5.0 reached in Q1 2009.”

That last record low, of course, came after the financial crisis of 2008. As was the case then, the country’s retail and business executives are calling for federal lawmakers and leaders to help out.

“Our battle against COVID-19 is far from over, and our top priority remains the health and safety of our employees, customers and communities we serve,” said Doug McMillon, Chairman and CEO of Walmart, as well as chairman of Business Roundtable. “We urge lawmakers at the federal, state and local levels to coordinate as much as possible to control further spread of this virus. Business Roundtable will continue working with lawmakers and public health officials to ensure all Americans, especially those most vulnerable, benefit from policies that will boost economic recovery, while prioritizing public safety.”

The new report also found that:

  • CEO plans for hiring decreased by 39.8 points to 26.3, 32.6 points below the sub-index’s historical average of 58.9.
  • CEO plans for capital investment decreased by 37.3 points to 25.0, 51.3 points below the sub-index’s historical average of 76.3. 
  • CEO expectations for sales decreased by 38.4 points to 51.5, 60.6 points below the sub-index’s historical average of 112.1. 
  • In their second estimate of 2020 U.S. GDP growth, CEOs projected a 3.8 percent contraction for the year, which dropped 5.8 percentage points from last quarter’s estimate of 2.0 percent growth.

“The outlook of Business Roundtable CEOs reflects the reality of current economic conditions,” said Joshua Bolten, the president and CEO of Business Roundtable. “We appreciate the actions taken by the administration and Congress so far to help American workers, small businesses and communities, but there is much more to do.”

Check out the survey results below...

How Optimistic Are Retail CEOs about Economic Recovery?
This Business Roundtable chart shows CEO attitudes during the pandemic.

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