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CEO Confidence Jumps Dramatically as Faith in Trump, Economy Builds

Members of the Business Roundtable, America’s biggest CEO peer group, had initially reacted with caution to Donald Trump’s election. But something appears to have changed in the last few months.

CEOs’ confidence in the economy has soared, breaking a multi-year holding pattern, as excitement builds over the president’s proposed tax cuts, regulatory reductions and infrastructure spending plans.

In addition to Trump’s pledges, the economy has been humming along nicely in the background, with unemployment figures released last week falling to new lows and the Federal Reserve poised to raise rates again.

CEO group Business Roundtable’s first-quarter economic outlook index, based on the responses of 141 members, jumped to 93.3 points from 74.2 points in the previous quarter. The increase is the biggest recorded since 2009, when the economy was emerging from the deepest depths of the financial crisis, and has exceeded the poll’s long-term average of 79.8 for the first time in almost two years.

“I am enthusiastic about the opportunity to enact a meaningful pro-growth agenda that will benefit all Americans,” JPMorgan CEO Jamie Dimon, who is also Business Rountable’s chairman, said. “As these results confirm, business confidence and optimism have increased dramatically.”

“I AM ENTHUSIASTIC ABOUT THE OPPORTUNITY TO ENACT A MEANINGFUL PRO-GROWTH AGENDA THAT WILL BENEFIT ALL AMERICANS.”

Those surveyed nominated tax reform as the best way to create a positive environment for growth, followed by regulatory reform and infrastructure investment, respectively. “CEOs appear to be responding to early indications that the new administration is serious about creating a better environment for job creation and investment in America,” the group’s CEO, Joshua Bolten, said.

The president himself embraced the survey results: “Great optimism in America—the results will be even better,” he wrote on Twitter.

Increased business confidence is translating to bolder planning, with an index on hiring expectations climbing by 18.0 points to 73.6 and another on capital spending increasing by 18.4 points to 82.6. A measure of sales expectations rose by 21.0 points to 123.8.

Overall, CEOs expect the economy to grow by 2.2% in 2017, up from an expected 2.0% indicated in the previous quarter.

In December, CEOs had reacted more cautiously to Trump’s election, with the peer group’s fourth-quarter economic outlook index rising more modestly to 74.2 points, up from 69.6 in the third quarter.

Chief Executive’s March CEO Confidence Index also indicates the mood has become more optimistic, rebounding to 7.41 out of 10 after edging back slightly in February to 6.99 from a high of 7.07 in January.

Trump is still having trouble getting Republicans to agree on how to repeal and replace the Affordable Care Act and there’s consternation among lawmakers as well as CEOs about how he will fund his tax cuts and infrastructure spending plans.

About Ross Kelly

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.