JPMorgan CEO Jamie Dimon (Photo: AP)

Business CEOs are forecasting 2.7% U.S GDP growth in 2019, according to the first estimate released Friday by the Business Roundtable as part of its fourth-quarter economic outlook. The 2019 GDP forecast is moderately below the estimated 3% growth rate that many economists are expecting for the current year.

The roundtable’s 2019 forecast was released as part of the group’s regular quarterly Economic Outlook Index, based on CEOs’ expectations for sales, capital spending and hiring over the next six months.

The overall Q4 Economic Outlook Index fell for the third consecutive quarter, down 4.9 points to 104.4. Readings above 50 indicate expansion; reading below, contraction.

All three sub-indexes also fell. The sales sub-index dropped 8.7 points to 123.6; the capital spending index fell 5.3 points to 97.9 and the hiring index lost 0.9 points to end at 91.7.

While 80% of the CEOs surveyed expect sales will increase over the next six months, just a little over half (53%) expect capital spending and hiring (56%) will rise.

Still, Jamie Dimon, chairman of the Business Roundtable and CEO of JPMorgan Chase, said in a statement that CEO plans for hiring and capital spending were still “historically high,” due in large part to “significant progress on tax reform and a smarter approach to regulation.”

Indeed, when asked about the greatest price pressures their companies face, 13% of the CEOs surveyed identified regulatory costs versus 40% two years ago, reflecting the easier regulatory regime of the current White House and Congress.

Far more identified labor costs (37%) and materials costs (20%) as the leading cost pressures for companies, which reflect tight labor markets and higher U.S. tariffs, according to the Business Roundtable.

Not surprisingly, roughly 90% of the CEOs surveyed said that maintaining the 21% corporate tax rate, enacted in the 2017 tax cut bill, and easing regulations further will benefit business activity.

Eighty percent said removing trade barriers and investing in new infrastructure would benefit business activity and close to 70% see a benefit from modernizing the U.S. immigration system, including skill-based legal immigration.

“Outdated infrastructure, barriers to trade and a broken immigration system all pose risks to America’s long-term economic vitality,” said Joshua Bolten, president and CEO of Business Roundtable, in a statement. 

The Roundtable recently coordinated a letter signed by 100 CEOs opposing a White House proposal that would make it more difficult for immigrants to legally enter the U.S. or remain here if they use public benefits.

In a Q&A briefing following release of the Roundtable outlook, Bolten said some companies are already experiencing substantial increases in import costs as a result of the current U.S. tariffs on steel and aluminum imports. Business costs will likely rise further if the U.S. imposes higher and more broad-based tariffs on Chinese imports after the 90-day postponement recently announced by the White House ends without a negotiated deal.

Bolten said a White House proposal to end NAFTA before Congress votes on its replacement, which was recently successfully negotiated with Canada and Mexico, is a “bad idea.”

A total of 141 CEOs completed the Business Roundtable survey, which was conducted between Nov. 6 and 26.