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Top CEOs see impact from coronavirus lingering until at least end of 2021

General Motors Chairman and CEO Mary Barra on April 1, 2020 tours one of the company’s facilities in Warren, Michigan that will produce Level 1 face masks.

GM

The chief executives of the nation’s biggest companies expect the business impact from the coronavirus to linger until at least the end of 2021. Nearly a third of them fear it could persist beyond then.

In a second-quarter report from the Business Roundtable released Monday, the corporate trade group said that a survey of its members − which include General Motors, Apple and Johnson & Johnson, among other major companies – showed that a majority expect most expect business conditions to recover by the end of 2021.

But significant doubt remains: 27% expect the recovery to stretch beyond next year.

That sizable percentage − and disagreement among the country’s most powerful executives − represents how uncertain the economic climate remains as the U.S. battles a health disaster with little modern precedence. 

There had been hopes that the U.S. was on its way to recovery after fears and lockdown orders jolted the economy this spring. But cases of the coronavirus are back on the rise, and states like Texas have had to delay their reopening plans. On Friday alone, 45,255 additional cases were reported, bringing the country’s seven-day average to more than 41% higher than the prior week.

A staff member checks a customer’s temperature at an Apple Store entrance during phase one of reopening after lockdown from the COVID-19 outbreak in New York City, New York, U.S. June 17, 2020.

Brendan McDermid | Reuters

The Business Roundtable report referred to the growing infection rate, saying the new cases “suggest the need for broader adoption of safety measures and for public officials to examine their reopening plans to ensure widespread use of masks, continued limitations on gathering size, and measures to keep vulnerable populations safe.”

In some cases, CEOs have acted before local governments, with companies such as Apple closing stores in hot-spot states before being mandated to do so. 

“Our battle against COVID-19 is far from over, and our top priority remains the health and safety of our employees, customers and communities we serve,” said Walmart CEO and Business Roundtable Chairman Doug McMillon. “We urge lawmakers at the federal, state and local levels to coordinate as much as possible to control further spread of this virus.”

Americans lined up to buy goods at supermarkets like Costco Wholesale and Walmart as fears over COVID-19 pandemic in New Jersey, United States on April 18, 2020.

Tayfun Coskun | Anadolu Agency | Getty Images

The Business Roundtable’s CEO Economic Outlook Survey − a composite index of chief executive plans for capital spending and hiring over the next six months − fell to 34.3, its lowest reading since the second quarter of 2009, as the U.S. was struggling to recover from the global financial meltdown of the previous year. The record low, which the index hit during the first quarter of 2009, is negative 5. 

The second quarter survey was conducted between June 1 and 22.

The U.S. officially entered the coronavirus recession in February of this year. 

The BRT report comes as the U.S. government is still crafting its economic response to the pandemic. Lawmakers have yet to act on a follow-up piece of major legislation to the $2 trillion CARES Act signed into law in late March. While informal talks have already begun, they are expected to begin in more earnest in mid-July.

On Monday, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, the top Democrats in Congress, urged the Republican-led Senate leadership to act quickly on legislation. They warned “the nation has seen a dramatic surge in both cases and deaths caused by the COVID-19 pandemic” and “our economy is facing one of its greatest challenges since the Great Depression.”

US Speaker of the House Nancy Pelosi (L) and Senate Democratic Leader Chuck Schumer (R) hold a press conference on Capitol Hill in Washington, DC, May 22, 2019, following a meeting with US President Donald Trump at the White House.

Saul Loeb | AFP | Getty Images

Lobbyists have told CNBC that if the coronavirus infection rate continues to rise, and the market shows signs of fear, they expect that Congress will need to shift its focus from initiatives aimed at broader recovery efforts to plugging economic holes, as it did with the CARES Act. 

The Business Roundtable is among the corporate lobbying groups that have already made clear some of their priorities in that next legislative package. In a letter to House and Senate leadership in May, the group urged a “Back to Work bonus” that matches the $600 added unemployment benefit granted by the CARES Act, which some lawmakers have said disincentivizes unemployed workers from returning to work. The group is among those urging liability protections to reduce “costly non-meritorious litigation.”

“We appreciate the actions taken by the Administration and Congress so far to help American workers, small businesses and communities, but there is much more to do,” said Joshua Bolten, president and CEO of Business Roundtable, in a statement.

“We encourage policymakers to work together on additional measures that will help bring a rapid end to this public health crisis and encourage economic recovery efforts as business operations resume. CEOs remain committed to promoting adherence to COVID-19 safety measures so that states can safely remain open for business.”

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