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US CEOs cut economic growth forecast; CFOs expect recession in 2020

Optimism among CEOs and CFOs of major U.S.-based companies weakened in the third quarter amid persistent trade uncertainty, slowing global economic growth and expectations of a 2020 recession, two new surveys released Sept. 18 said.

Company CEOs who are part of the Business Roundtable lowered their GDP growth forecast for 2019 to 2.3% from an estimate of 2.6% in the second quarter. The association's CEO economic outlook index also fell by 10.3 points on a quarterly basis to a reading of 79.2, suggesting a moderation in the pace of future growth. Subindexes gauging CEO plans for capital investment and hiring as well as sales expectations all posted declines.

"This quarter's survey shows American businesses now have their foot poised above the brake, and they're tapping the brake periodically," Business Roundtable President and CEO Joshua Bolten said in a press release.

Bolten urged President Donald Trump's administration and Congress to promote rules-based trade, saying uncertainty is limiting growth and investment in the U.S.

The Business Roundtable said almost no CEO reported a positive business impact resulting from U.S. trade policy and other countries' retaliation over the last 12 months.

Separately, a survey of 225 U.S. CFOs conducted by Duke University showed that business optimism dropped in the third quarter to its lowest level since September 2016.

"In the United States, the number of CFOs growing more pessimistic outnumbers those growing more optimistic by a five to one margin," said John Graham, director of the survey and finance professor at Duke University's Fuqua School of Business.

Some 53% of CFOs expect the U.S. to be in an economic recession by the third quarter of 2020, while 67% predict a recession by the end of the same year, the survey found.

"Trade wars and broad economic uncertainty are hurting economic outlooks worldwide," Graham said.

Economic uncertainty is what most worries CFOs, according to Duke's survey results. Their other major concerns include government policies, data security and the rising cost of employee benefits.