Optimism among CEOs of some of the largest U.S. companies jumped in the first quarter by the most since the economy was emerging from the latest 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 March 14. 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 since 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% 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% in 2017, up from their December estimate of 2%.
A 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.
|By Sho Chandra
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