The heads of the largest U.S. companies are feeling optimistic about the economy just two months since President Trump’s inauguration.
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 in the first quarter of 2017, according to the group’s survey released Tuesday. It’s the biggest increase in almost eight years and the highest reading in nearly three years. Since the survey began in 2002, the average has been 79.8. Readings above 50 indicate economic expansion.
The 141 CEOs surveyed between February 8 and March 1 projected that the U.S. economy would expand 2.2% this year, up from a 2% prediction in December. “I think the CEOs generally and strongly feel we can do a lot better than we’re doing,” Jamie Dimon, Business Roundtable chairman and CEO of JPMorgan Chase & Co., said in a press release. “We’re not believers that we’re someone stuck in low growth. We just need good policy at this point.”
The survey found that 52% of CEOs said tax reform would be the single best policy change to create the most pro-growth environment for businesses. The survey also showed that the sales outlook for the next six months climbed 21 points to a five-year high of 123.8 in the first quarter. Capital spending advanced 18.4 points to an almost three-year high and hiring expectations surged 18 points, the most in seven years.
In his first address to a joint session of Congress earlier this month, Trump echoed his promises of enacting cuts to the corporate rate while also providing “massive relief for the middle class.” He called on Congress to repeal and replace the Affordable Care Act with reforms that “expand choice, increase access, lower costs, and at the same time, provide better healthcare.” He also promised to negotiate fairer global trade for the U.S., trim wasteful spending and reduce unnecessary restrictions on businesses.
Separately, the National Federation of Independent Business reported that its Small Business Optimism Index was near a 43-year high in February. That optimism has been shared by the promotional product industry as the Counselor Confidence Index, which measures the health of distributor companies, improved slightly in Q4 2016 to 115, from 113 in the previous quarter. This ties Q1 of 2015 for the highest-ever index rating.
“It is clear from our data that optimism skyrocketed after the election because small-business owners anticipated a change in policy,” NFIB President Juanita Duggan said in a press release. “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November.”