U.S. facing slow growth, not recession, CEOs say

COLUMBUS, Ohio (Reuters) - The economy is not slipping back into recession, but will face a long, slow recovery as political gridlock in Washington and Europe make businesses nervous about investing, U.S. corporate leaders said.

That was the word from General Electric Co Chief Executive Jeff Immelt and FedEx Corp CEO Fred Smith at an event in Columbus, Ohio, on Thursday.

"Recovery is under way, but it's a long, slow recovery. Slower than we'd like," Immelt told a group of about 500 executives from midsized U.S. companies.

FedEx's Smith offered a similar outlook.

"We don't see a contraction; we don't see a recession," the founder of the No. 2 package-delivery company said. "It's steady as you go, slow growth."

ExxonMobil Corp CEO Rex Tillerson sounded a similar note in Washington.

"I am not as optimistic as I was six months ago. It will continue, I am afraid, to be a sluggish (U.S.) economy, and globally the economy will not perform as well as we expected," Tillerson told the Washington Ideas Forum.

"We will have positive growth (but) it is not going to be as positive as we hoped."

Their measured confidence comes at a time when the U.S. economy is highly fragile, spooking investors and contributing to the nearly 10 percent decline in broad Standard & Poor's 500 index since the start of the year.

Their remarks came at an event where GE Capital and Ohio State University Fisher College of Business unveiled research on the "middle market" sector of U.S. business, companies with between $10 million and $1 billion in annual revenue.

The study found that tier of business is an underappreciated jobs engine for the U.S. economy, accounting for about one-third of employment and continuing to add workers through the recession, while big U.S. companies were shedding people.

POLITICAL UNCERTAINTY HURTS INVESTMENT

Both Immelt and Smith said political logjams in Washington and Brussels have made businesses more reluctant to invest and hire -- stubbornly high unemployment stands as the biggest roadblock to the United States' recovery from the 2007-2009 recession.

"There is just a lot of volatility because the world has problems and classic institutions have not been able to solve these problems -- that creates volatility," Immelt said. "I'd like to think that a fully functioning integrated financial system in Europe could have stopped the Greece crisis quickly. That hasn't taken place and that just creates a level of volatility."

Concerns that Greece could default on its debt have rattled European and U.S. banks over the past couple of weeks and the European Central Bank on Thursday said it sees "intensified" threats to the euro zone economy.

The logjams are not limited to Europe. Immelt cited this summer's standoff in Washington over whether to raise the nation's debt ceiling or allow the United States to slip into default as another sap on confidence.

"Congress just doing one bipartisan thing, however small, would be conducive to the market, it would be a positive to investors," Immelt said.

Immelt, a lifelong Republican, currently serves as a top adviser to the Obama administration on jobs and the economy.

However, not all the blame lies with politicians, Smith acknowledged. He suggested that CEOs, who command considerable public attention in their own right, could do more to tamp down the partisan bickering that has flared in the United States.

In part, he said, CEOs can afford to be more candid in commenting on when they agree or disagree with policymakers than can officials who face election.

"If one person on the right said, 'You know President Obama did a hell of a job on that bin Laden thing,' the next time he ran for anything it would be on the TV and his opponent would say, 'Obama supporter, I'm a better Republican,'" Smith said.

"Those of us in the business community who don't need to run for anything probably need to be a bit more candid than we have."

(Reporting by Scott Malone in Columbus, Ohio, additional reporting by Stella Dawson in Washington, editing by Matthew Lewis)