Many Bay Area companies are holding off on business investments as they wait to see if the U.S. will plunge off the fiscal cliff, according to a Bay Area Council survey of more than 400 CEOs, executives and top economic development officials from around the region. The survey found that 38 percent of CEOs and executives are delaying business investments over uncertainty about whether political leaders in Washington D.C. will come to terms on an agreement to avert the fiscal cliff. Another 27 percent said uncertainty around any resolution to the fiscal cliff is having a small influence on their business investment decisions. That comes on top of 84 percent of CEOs and other executives in the survey who said the fiscal cliff is causing them concern.
“Uncertainty is a chief enemy of economic and business growth,” said Jim Wunderman, President and CEO of the Bay Area Council. “At a time when we should be doing everything possible to encourage and spur business investment, the inability of political leaders to reach a compromise on the fiscal cliff is putting an unnecessary drag on our economy. The message for Washington is clear: Get a deal done, now.”
The impact of the fiscal cliff on business investment likely reflects the fact that the fiscal cliff threatens dramatic reductions in federal spending in defense and other industries and the elimination of a variety of tax benefits related to business investment. Indeed, the survey showed that CEOs in the manufacturing (54 percent) and technology industries (67 percent) expressed the greatest reluctance to invest in their businesses. Despite its chilling effect on retail hiring, the fiscal cliff doesn’t appear to be having an immediate impact on hiring in other industries. Overall, 66 percent of CEOs and executives surveyed said the fiscal cliff isn’t causing them to delay hiring. Uncertainty about how the fiscal cliff might impact consumers also appeared to rattle the retail sector, where executives said they are delaying new business investment and delaying hiring.
|Concern about the fiscal cliff.||Has uncertainty about the fiscal cliff caused your company to delay other business investments?|
|Don’t know||1%||Yes, very much||12%|
|Not at all concerned||4%||Yes, somewhat||26%|
|Not very concerned||12%||No, not too much||27%|
|Somewhat concerned||37%||No, not at all||30%|
|Very concerned||47%||Don’t know||4%|
|Has uncertainty about the fiscal cliff caused your company to delay hiring?|
|Yes, very much||9%|
|No, not too much||32%|
|No, not at all||34%|