The rippling economic effects of the coronavirus pandemic will continue to plague the United States’ workforce for months and years to come, causing persistent layoffs across industries, indicates a group of CEOs surveyed by The Conference Board.
The think tank today released its Measure of CEO Confidence report for the third quarter, which showed chief executives’ confidence edge up one point, from 44 to 45, compared with Q2. (A reading below 50 points reflects more negative than positive responses.)
However, 38% of those same leaders said that, over the next 12 months, they expect to reduce their workforce. What’s more, 37% say they will trim their capital spending budgets by 10% or more.
With economic uncertainty likely to drag on into the foreseeable future, more than a third of global leaders surveyed do not expect to increase employees’ average wages over the next 12 months. Nearly 50% indicated they will increase wages by less than 3%.
“Without substantial containment of COVID-19, widespread uncertainty will continue being the dominant cloud hanging over America’s CEO community,” said Bart van Ark, chief economist of The Conference Board. “With more than one third of CEOs planning to make workforce and sizeable capital spending reductions over the next year, the effects on the economy could extend beyond the next 12 months.”
The latest CEO confidence results were part of a new collaboration between The Conference Board and The Business Council. The project saw a majority of the Council’s CEOs — all of whom helm global organizations — surveyed.
Today’s report follows months of macroeconomic pressures for companies around the world, grappling with the economic fallout of the health crisis. Over the past few months, many U.S. employers facing dwindling liquidity amid widespread closures turned to mass furloughs or layoffs to keep their businesses afloat.
Just last month, in a separate Conference Board survey of more than 1,300 CEOs and c-suite execs, most leaders said they expect to emerge from the COVID-19 health crisis using more contract workers and fewer permanent staff.
Although state and local officials have largely moved forward with their reopening plans, a surge in new COVID-19 infections — particularly in the South, West and parts of the Midwest — have resulted in reinforced restrictions. In certain areas, stores and offices that had just begun to rehire their workers shut down once again, pushing more Americans back to unemployment.
It’s a tough turn of events for many leaders who were hoping to power through the crisis during the first half of the fiscal year and may have budgeted accordingly.
Where retail is concerned, a long list of companies in recent months — including JCPenney, Neiman Marcus, Stein Mart and J.Crew — have had to seek Chapter 11 protection. In many cases, furloughs and temporary store closures borne of government mandates in March have become permanent.