Image: Job seeker
Paul Sancya  /  AP
Terrell Collins, of Detroit, wipes his face while searching for employment on a laptop computer while attending a job fair in Livonia, Mich.
updated 12/8/2009 2:04:29 PM ET 2009-12-08T19:04:29

More of America's largest companies will shrink their staffs than will hire in the next six months, according to the latest survey of their CEOs.

Nineteen percent of the CEOs expect to expand their work forces, while 31 percent predict a decrease in the next six months, according to a quarterly survey from the Business Roundtable released Tuesday. That's slightly better than the 13 percent who expected increased hiring three months earlier. At that time, 40 percent forecast cuts.

The CEOs also expect the overall U.S. economy to grow by 1.9 percent in 2010. That would mark a slowdown from the 2.8 percent pace in the third quarter of 2009. Last quarter's growth followed a record four straight quarterly declines and was the strongest signal that a recovery from the recession had started.

"These forecasts are in line with an anticipated slow and uneven recovery," said Ivan Seidenberg, CEO of Verizon Communications and chairman of the Roundtable. Sales and capital spending already are beginning to rise, but "it still will take some time for these gains to translate into more jobs and higher employment," he said.

A new question on the Roundtable survey asked CEOs to identify their greatest cost pressures. The largest group — about one-third — cited health care.

The Roundtable has emerged as an aggressive voice in the debate over the President Barack Obama administration's overhaul of the health care system. The group has applauded some measures it says would keep costs down. But it has criticized provisions like a government-run plan for those who can't get other insurance.

In more positive news, the group's economic outlook index — a combination of expectations for spending, sales and hiring — rose to 71.5, from 44.9 in the third quarter. Numbers above 50 represent economic growth. It was the first time the index rose above 50 since the third quarter of 2008, just before the financial crisis struck with force.

The number of CEOs expecting to increase capital spending nearly doubled, to 40 from 21 percent. The number forecasting an increase in sales grew to 68 from 51 percent.

Economists say employment at large firms is likely to remain flat through much of 2010, since many companies already have hit their targets for what is expected to be a halting recovery. Indeed, the largest group of CEOs — 50 percent — expected employment to remain unchanged in the next six months.

"You'd have to have a big change in their operating assumptions for those numbers to move," said Brian Bethune, an economist with IHS Global Insight. "We're in very much of a holding pattern for 2010."

Bethune said small business is the "only hope" for job growth next year.

Major Market Indices

In Washington Tuesday, Obama made small business a major focus of multibillion-dollar proposals to spur job growth and stimulate the economy.

Obama proposed a new tax cut for small businesses that hire in 2010 and an elimination for one year of the capital gains tax on profits from small-business investments. He also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year.

Obama discussed new spending for highway, bridge and other infrastructure projects, and tax incentives to encourage people to make their homes more energy efficient.

"We avoided the depression many feared," Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, "Our work is far from done."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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