Concerns investigations into the Trump administration’s relations with Russia could distract the president from his pro-growth agenda haven’t swayed CEOs, who remain remarkably upbeat about the American economy’s prospects.
CEO peer group Business Roundtable’s second-quarter economic outlook index, released this morning, has risen slightly to 93.9 points from 93.3 in the first quarter, when it posted its biggest single rise in seven years.
The index, based on the views of 148 CEOs at some of America’s biggest companies, is now at its highest level since the second quarter of 2014 and well above its historical average of 8.0.
“Business leaders remain confident that Congress and the administration will enact tax reform because the cost of inaction for America’s businesses and workers is too great,” Business Roundtable CEO Joshua Bolten said.
“Business leaders remain confident that Congress and the administration will enact tax reform because the cost of inaction for America’s businesses and workers is too great.”
The survey was conducted between May 3 and May 24, a period during which the president came under fire for sacking FBI Director James Comey and subsequently suggested on national television his decision was linked to the Russia probe.
Conversely, Chief Executive’s CEO Confidence Index showed a slight downturn in both April (7.29) and May (7.03), on a scale of 1 to 10 with 10 being the highest, after topping off at a high of 7.41 in March.
Comey is due to appear before the Senate Intelligence Committee tomorrow. He is expected to reveal whether Trump pressured him to call off an investigation into former national security advisor Michael Flynn’s interaction with the Russians.
The House passed Trump’s Obamacare replace and repeal bill on May 3, indicating Republicans could overcome divisions to enact big rule changes, though progress on healthcare reform remains bogged down in the Senate with little signs of an imminent breakthrough.
Tax reform could be just as tricky, especially since the administration has yet to address the thorny question of funding big tax cuts. CEOs remain split on that issue, with big exporters supporting the introduction of a “border adjustment tax” and retailers still unhappy with the idea.
Notwithstanding the climate in Washington, the U.S. economy is continuing its forward momentum, with all signs pointing to at least one more interest rate rise by the Fed this year.
On Friday, official figures showed the U.S. unemployment rate fell to a 16-year low of 4.3% in May, though jobs growth slowed.
According to Business Roundtable’s survey, CEO hiring expectations eased back a modest 3.3 points in the second quarter, but capital investment plans rose 4.4 points and sales expectations held steady.
Respondents projected GDP growth of 2.0% in 2017, down slightly from the 2.2% rate projected in March.
Chairman Jamie Dimon, CEO of JPMorgan Chase, said the survey results reflected confidence in the prospects of tax reform.
“CEOs are also responding to the administration’s commitment to creating a more favorable regulatory environment, protecting the safety and health of our citizens while also protecting jobs,” Dimon said.