Weak Economic Data Lends Urgency to Avoiding Fiscal Cliff

November 16, 2012

Amid signs that U.S. job growth is likely to slow over the next few months, a large number of CEOs, including those from some HR Policy member companies, met with President Obama this week to emphasize their view that Washington must reach a deal to avoid the fiscal cliff.  The CEOs believe that the uncertainty is hurting the nation's business climate and preventing hiring.  Ursula Burns, CEO of Xerox Corp., said the meeting did not get into specifics but the discussion was “all about trying to make American business more competitive, trying to have a fair, balanced approach to tax reform, to spending cuts.”  Senator Lamar Alexander (R-TN) said business leaders can help spur a deal by warning of the economic consequences of going over the fiscal cliff.  “They can create an environment in which senators and congressmen are willing to take difficult votes on fixing the debt, because it's going to be hard dirty work, very unpopular, once people see the details of it, but it absolutely has to be done,” Alexander said.  On the economic front, factory activity in the U.S. mid-Atlantic region unexpectedly contracted in November, according to the Philadelphia Federal Reserve Bank, and labor market conditions remained weak.  The percentage of firms reporting decreases in employment (20%) exceeded the percentage reporting increases (13%), and expectations for future employment and capital spending continue to show moderation.  Job openings in the U.S. have also dropped to a five-month low, signaling that uneven progress in the labor market may extend through year-end.