- March 14, 2017 -

Optimism Among U.S. CEOs Shows Biggest Increase Since 2009

Bloomberg

Optimism among chief executive officers of some of the largest U.S. companies jumped in the first quarter by the most since the economy was emerging from the last recession, as the outlook for sales, the labor market and investment brightened considerably.

The Business Roundtable’s CEO Economic Outlook Index -- a measure of expectations for revenue, capital spending and employment -- jumped 19.1 points to 93.3, according to the group’s survey released Tuesday. The increase, the biggest since the final three months of 2009, left the gauge above its long-run average of 79.8 for the first time in seven quarters. Readings above 50 indicate economic expansion.

The survey is yet another in a series of confidence measures that have shown sizable upswings among businesses and consumers following Donald Trump’s victory in the November presidential election. While companies have said they’re encouraged by his plans to cut corporate taxes, reduce regulations and invest in infrastructure, the real test for the economy is whether they follow through with more capital spending and hiring.

“I am enthusiastic about the opportunity to enact a meaningful pro-growth agenda that will benefit all Americans,” Jamie Dimon, chairman of Business Roundtable and CEO of JPMorgan Chase & Co., said in a statement. “As these results confirm, business confidence and optimism have increased dramatically.”

The survey, with responses from 141 member CEOs, was conducted from Feb. 8 to March 1. In response to a special question, 52 percent of the participants said tax reform would be the single best policy change to create the most pro-growth environment for businesses.

Corporate leaders project the economy will expand 2.2 percent in 2017, up from their December estimate of 2 percent.

Dimon said on a conference call that if the Federal Reserve is raising interest rates into a strong environment, that is more important than rates going up 25 basis points. Fed policy makers are meeting Tuesday and Wednesday, and are expected to boost their benchmark lending rate.

“The economy seems to be OK and may be getting a little bit stronger,” while other indicators such as inflation are moving into the Fed’s target range, Dimon said on the call. If policy makers are raising rates, “it’s probably a sign of strength, not a sign of weakness.”

The Business Roundtable’s measure of the sales outlook for the next six months climbed 21 points to a five-year high of 123.8 in the first quarter. A gauge reflecting plans for capital spending advanced 18.4 points to an almost three-year high. An index of hiring expectations surged 18 points, the most in seven years.

The Washington-based Business Roundtable represents companies with more than $6 trillion in annual revenue and about 15 million employees.