Optimism for the nation’s economic outlook among U.S. business leaders plummeted 16 percentage points in fourth quarter 2013 to a net balance of 36 percent according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,300 business leaders in 45 countries.

Hiring expectations in the United States declined for the first time in the past year, with a net balance of 38 percent of business leaders foreseeing an increase in hiring during the coming year, down from 42 percent the previous quarter. In addition, net 52 percent of business leaders expect profits to grow, a slight decline from 54 percent the previous quarter and a substantial increase from 28 percent a year ago. U.S. business growth expectations actually improved, with net 65 percent of businesses expecting to see revenues climb during the next 12 months, up from 50 percent in third quarter 2013 and up from 38 percent from the same period last year. However, a net balance of 37 percent of U.S. businesses leaders cite economic uncertainty as the number one constraint to growing their operations in the next 12 months.

“It’s clear that the recent gridlock in Washington is significantly contributing to the lack of confidence in, and optimism about, our economy among the nation’s business leaders,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Our nation’s political leaders were able to reach a budget agreement, which will likely avert another costly government shutdown and extend the sequester for the next two years. However, they must now turn their attention to embracing a long-term debt ceiling solution combined with comprehensive tax and entitlement reforms that would provide a level of economic certainty that businesses are desperately seeking.”

The notion that the government shutdown affected optimism about the economy correlates with other recent research from Grant Thornton LLP, which indicated that 60 percent of CFOs believe the state of the U.S. economy will remain the same or worsen during the next six months because of similar uncertainty.¹

The lack of optimism in the U.S. economy is consistent with what is occurring in other global markets. Global business optimism fell to a net balance of 27 percent, down five percentage points from third quarter 2013. Optimism among Chinese business leaders declined following a 27 percentage-point increase to net 31 percent in the previous quarter. In fourth quarter 2013, business optimism in the world’s second largest economy fell to a net balance of 22 percent.

Brazil business optimism also dropped significantly from a net balance of 31 percent to 10 percent, a record low for the IBR. Russian optimism declined from a net balance of 19 percent to just 1 percent, its lowest since 2011.

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Notes to editors

The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of more than 12,500 businesses per year across 45 economies. This unique survey draws upon 21 years of trend data for most European participants and 10 years for many non-European economies. For more information, please visit: www.internationalbusinessreport.com

Data collection

Data collection is managed by Grant Thornton International’s core research partner – Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone. For percentages not identified as a percentage of respondents, the net percent balance is reported as the proportion of companies reporting they are optimistic/the trend has increased less those reporting they are pessimistic/trend has decreased.

Sample

IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,300 businesses from all industry sectors across the globe conducted during November and December 2013. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.

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¹ Grant Thornton LLP ‘Fall 2013 CFO Survey’