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While the fiscal cliff might not be at the forefront of concerns for the average American, it is deeply affecting the spending and hiring plans of many businesses.
Four recent surveys show that corporate chief executive officers and chief financial officers are taking measures to prepare for the Jan. 2, 2013 actuation of the fiscal cliff.
According to a recent study by the Congressional Budget Office, this could easily take the U.S. economy back into another recession. Despite that threat, it appears less and less likely that anything will be done by the Obama administration and Congress to avert the crisis.
Needless to say, this has not gone unnoticed by the high level executive leadership of corporate America.
"This complete Mexican standoff that we have now is not getting us anywhere," Jim McNery, Chief Executive Officer of Boeing Company (NYSE: BA) said about the looming failure of Congress and the Obama administration to mitigate the impact of the fiscal cliff.
Business Feels Bearish
Since businesses see fiscal cliff talks failing to deliver progress, growth expectations of the country's biggest companies have fallen.
Members of the Business Roundtable, an association of chief executive officers, expressed in a recent survey bearish sentiment for every business measure (sales, capital spending and hiring).
From the results of this research, the Business Roundtable has lowered its projections for a wide range of economic indicators for its most recent CEO Economic Outlook Survey. These were registered at the lowest level since 2009, the nadir of the Great Recession.
Those closest to the fiscal operations of a company, the chief financial officers, are similarly bearish due in a large part to fiscal cliff 2013.
The CFO Signals Survey found that 47% of chief financial officers are more pessimistic about how well their company will do this quarter.
According to the survey, that sentiment represents the "most somber year-over-year expectations" ever in the history of that research report.
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CEOs and CFOs view hitting the fiscal cliff as a huge failure in the economic leadership from the elected political leaders in Washington, DC.
John Engler, the former governor of Michigan who is now the President of the Business Roundtable, compared the negligence to the recent standoff between the National Football League (NFL) and its referees.
"This is something that urgently needs to be addressed," Engler said of the fiscal cliff. "This is the same problem the NFL is having. The players aren't quite clear how to play the game, because the refereeing is so bad. We can lead, but we can't lead by not making decisions."
More and more, the U.S. Federal Reserve and Chairman Ben Bernanke are instituting economic programs that dictate both monetary and fiscal policy, not the White House or Capitol Hill.
Ross Perot, the former presidential candidate and founder of Electronic Data Systems and Perot Systems, stated in a recent interview that "We're on the edge of the cliff, and we have got to start fixing it now. Otherwise we're leaving a disaster to our children's and or grandchildren's future."
Related Articles and News:
- Money Morning:
Fiscal Cliff 2013: The Biggest Threat To Your Profits?
- Money Morning:
Don't Let Fiscal Cliff 2013 Scare You from Dividend Stocks
- USA Today:
Perot's economic stance resonates 20 years later
- The Washington Times:
Ceos Feeling Gloomy These Days ; Edging Toward Risky 'Fiscal Cliff'