U.S. chief executive officers are turning more pessimistic about a second-half recovery as rising unemployment and Europe’s debt turmoil threaten domestic growth prospects.
CEOs from General Motors Co., to Hewlett-Packard Co. and Manpower Inc. say they are concerned about the health of the U.S. economy. While economists predict a continuing expansion this year and next, executives see a mounting number of obstacles that could clip growth.
U.S. employers added the fewest number of workers to their payrolls in a year last month, while companies, including Tiffany & Co. and mattress maker Tempur-Pedic International Inc., cut their full-year forecasts. European policymakers are also struggling to resolve a crisis that has tipped at least eight of the 17 euro-area economies into recession. The U.S. presidential election is another area of concern, CEOs said.
“There are so many uncertainties,” said Jeffrey Joerres, CEO of Manpower, the Milwaukee-based provider of temporary workers. “If these uncertainties keep stacking up and none get resolved, we’ll see a hiring pause rather than the current slowdown.”
After a 1.7 percent expansion last year, U.S. gross domestic product may increase by 2.2 percent in 2012 and by 2.4 percent in 2013, the median of 70 economists surveyed from June 1 to June 5 shows. The estimates are down 0.1 percentage point from those issued last month.
CEOs see jobs as a key driver of growth, even as they keep a lid on their own spending and hiring. Supervalu Inc.’s Albertsons grocery-store chain said this month it will cut as many as 2,500 jobs. Hewlett-Packard has announced the biggest round of job cuts out of any U.S. company this year, at 27,000, according to data compiled by Bloomberg.
“The economy seems to be just sort of bouncing along,” Hewlett-Packard CEO Meg Whitman said in an interview this week. “It doesn’t seem to be getting significantly better.”
Employment concerns, coupled with sinking housing prices, have made U.S. consumers reluctant to undertake big-ticket home renovations, said Lowe’s Cos. Chairman and CEO Robert Niblock. Lowe’s, the second-biggest U.S. home-improvement retailer after Home Depot Inc., is eliminating more than 500 corporate positions through voluntary buyouts this year after cutting 1,700 store-management jobs in 2011.