War. Inflation. Covid. CEOs’ optimism is dimming

Just a few months ago, optimism among American CEOs hit record highs. But given stubbornly high inflation, Russia’s invasion of Ukraine and a Covid wave in Europe, that sunny outlook has dimmed.

The Business Roundtable said Monday that its CEO Economic Outlook Survey dipped to a reading of 115 during the first quarter. CEOs also indicated decreased plans for hiring and investment and lower expectations for sales.

The group, whose members are the chief executives of top US companies, emphasized that, despite the dip, the survey still reflects historically strong hiring plans and growth expectations. But it’s important to note that the timing of the survey, which was conducted between February 22 and March 11, means some business leaders shared their sentiments before the full scale of Russia’s invasion of Ukraine was known.

Since the war began February 24, the economic impacts have been widespread. Among other factors, the West has imposed heavy sanctions on Russia, threatening to disrupt the supply of energy, food and other key materials.

SEVILLE, SPAIN - APRIL 30: Traffic flow on the highway Sevilla Huelva, the first weekend with mobility between provinces, where many Sevillians have taken advantage of these circumstances to go to the beaches of the province of Huelva, April 30, 2021 in Seville. Andalusia. (Photo By Eduardo Briones/Europa Press via Getty Images)

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And it isn’t just Ukraine. The Business Roundtable acknowledged that the continued risk from Covid-19 and rising inflation are also creating a period of uncertainty, especially when asking CEOs to look to the second half of this year.

The survey’s release comes ahead of a scheduled meeting Monday evening between President Joe Biden and Business Roundtable members at the group’s Washington office.

In a statement, Josh Bolten, CEO of the Business Roundtable, called for US officials to strengthen the economy during “this period of uncertainty” by maintaining a competitive tax and regulatory environment. He urged policymakers to address inflation by lowering tariffs and boosting trade, encouraging domestic energy production and working with business and labor leaders to address supply chain stress.

GM (GM) CEO Mary Barra, the chair of the Business Roundtable, urged Congress to pass a bipartisan bill that funds the CHIPS Act, which aims to address the computer chip shortage by boosting domestic chip manufacturing.