Top CEOs plan to hire more, but aren’t optimistic about the economy

Growth was sluggish in 2014, tempering expectations among top corporate heads going into 2015.

The nation’s top chief executives aren’t all that encouraged by economic signs and plan to decrease investments in the next six months, according to a new survey.

Despite the news, CEOs plan to increase hiring after decreasing those plans in the third quarter. About 40 percent plan to increase hiring compared with 34 percent in the third quarter.

Overall, the Business Roundtable economic outlook index dropped to 85.1 from 86.4 last quarter, the second straight quarterly decline. The index is a composite measure of how CEOs plan to spend on capital, hiring, and sales. It ranges from a high of 150 to a low of -50, with any reading above 50 indicating an expanding economy. The average has been 80.3 over the long haul.

AT&T CEO Randall Stephenson said that the economy basically ended where it start — performing below expectations, according to a Los Angeles Times report.

The 129 CEOs in the survey expect the economy to increase by 2.4 percent next year, which is what they expected this year. Growth reached 2.1 percent this year, mainly affected by a contraction in the first quarter.

CEOs are scaling back plans to invest, with only 36 percent of executives surveyed saying they would increase capital spending over the next six months, a drop from 39 percent last quarter. Meanwhile, 13 percent will actually decrease spending, and increase over 10 percent in the previous quarter.

The numbers are important indicators of the economy as they reflect that attitudes of those who are dependent on its performance for their bottom line.

CEOs believe an overhaul of the corporate tax code is important if the government wants to see more investment. The current rate is 35 percent, the highest of any advanced economy, and Business Roundtable wants that figure lowered to as low as 25 percent. It would even back eliminating certain corporate tax breaks if it could get that concession.

Although both Republicans and Democrats agree the corporate tax rate should be cut, there is still a lot of debate on just how far and what trade-offs should be involved.