Exclusive: CEO sentiment Trump bump
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Confidence among America's top chief executives is soaring after President-elect Trump's re-election, with high hopes the former president will usher in an era of low taxes and regulations.
Why it matters: Mainstream economists warn the economy will take a hit from some of Trump's proposals, but business leaders see a brighter outlook for their industries in the months ahead.
- The Business Roundtable's latest economic outlook index — first seen by Axios — jumped 12 points from last quarter to the highest level in more than two years.
What they're saying: Cisco CEO Chuck Robbins, who chairs the Business Roundtable, said in a statement that top executives feel "energized" by Washington set to "consider measures that can protect and strengthen tax reform, enable a sensible regulatory environment, and drive investment and job creation."
By the numbers: Nearly 80% of the lobbying group's CEO members expect higher sales in the next six months, up from 71% who expected the same last quarter.
- Now more than 40% plan to increase capital spending, an increase from the 35% who previously said so.
What to watch: A smaller share of executives plan to lay off workers in the months ahead, while roughly 38% plan to increase their workforce — up 4 points from last quarter.
- But slightly more CEOs plan to keep their workforces steady (40%). That's in line with a dynamic playing out in the macroeconomy: The job market looks "frozen," with low firing and hiring rates.
The intrigue: It's not just big businesses that are more optimistic. An index measuring sentiment among small business owners also surged after the election — notching the single largest one-month gain in the survey's 40-year history, according to the National Federation of Independent Business.
- "The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners," NFIB chief economist Bill Dunkelberg said in a release.
The other side: Economists, including some employed by firms whose CEOs belong to the Business Roundtable, say Trump's plans to slap across-the-board tariffs on U.S. imports is a risk to economic growth.
- In a statement, Business Roundtable CEO Joshua Bolten urged the incoming administration to avoid "overly-broad tariffs that could stoke inflation and raise costs for American businesses and consumers."
What to watch: That the election is over — without subsequent drama — might also be boosting CEO confidence.
- The economic backdrop has also improved. The labor market is still gently cooling, not sharply deteriorating as late summer data might have suggested.
- The Fed cut interest rates and signals it intends to lower them to a level that neither slows nor boosts the economy, though sticky inflation might delay the process.
- The global market selloff last quarter has given way to a rally with the S&P 500 near all-time highs.
