After more than a decade in the doldrums, Chief Executive’s monthly survey of CEO confidence finds the economic outlook of America’s corporate leaders nearing its most optimistic since we began the monthly survey in 2003, up 5% month over month in December and 7% since the same time last year.
This makes 2017 the second most optimistic year we’ve ever recorded, registering an average forward-looking confidence of 7.08 out of 10, surpassed only by the 2004 level of 7.47.
The approaching passage of the GOP’s business-centric tax bill appears to be the main source for the rising optimism. The last time confidence levels soared this high President Bush was showering the corporate world with a slew of new tax cuts in 2004. But it isn’t tax cuts alone driving CEO confidence. Just as in 2004, this year has been marked by falling unemployment, flat interest rates and inflation, and a soaring stock market.
In another barometer of perceived economic health, our survey of 267 CEOs also found two-thirds plan to add to their workforce in 2018, betting on business conditions continuing to improve in the year ahead. Only 5% of CEOs forecast a decrease in headcount.
CEOs are also expecting to increase both profitability and revenue, with only 9% now anticipating a decrease in profitability and 5% in revenue, compared to 15% and 12% respectively last January.
Despite the apparent goldilocks economy, some worries persist. “Cybersecurity and adversaries are the top concerns,” commented a mid-market professional services CEO who foresees increases of more than 20% in revenue, employees, capex and profits in 2018.
“I think there is a massive wave of digital disruption in front of us,” wrote another mid-market CEO who believes the retail sector will continue to be impacted by new emerging technology and digitally disruptive business models.
The president of a small tech company says it’s the regulatory landscape that is the biggest hurdle ahead, as it remains too cumbersome, preventing smaller players from focusing their efforts on strategy and gaining market share. A manufacturing president had echoed a similar feeling earlier this year, stating that the mere possibility of reducing the number and reach of regulations should be sufficient cause for increased optimism.
And large companies may indeed have more to look forward to, as reflected by CEOs’ optimism in future business conditions, which has jumped 17% since January.
The CEO Confidence Index is America’s largest monthly survey of chief executives. Each month, Chief Executive surveys CEOs across corporate America, at organizations of all types and sizes, to compile our CEO Confidence Index data.
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