At the threshold of 2018, most CEOs we talk with share two outlooks: a conviction that the U.S. economy will continue to grow and even strengthen, tempered by concerns about what’s going to come out of Washington. More than anything they want tax cuts.
Based on Chief Executive’s interviews with 20 CEOs of large and mid-sized U.S. companies, the C-Suite has returned to an assumption of growth after the Great Recession and eight years spent wincing at most things the Obama administration did. They foresee the continuation of gains that the U.S. economy began consolidating in 2017 as President Donald Trump rolled back regulations and demonstrated his trust in CEOs to stoke the economy with capital investments and job creation and grow their companies through mergers and acquisitions.
Interest rates and inflation are simmering just enough. Housing values and construction keep rising. Tightening labor markets have begun creating an updraft in household income and consumer confidence.
Even the economic devastation wrought by hurricanes hitting Texas, Florida and Puerto Rico in September has an upside, as massive rebuilding efforts in 2018 will help offset the retardation of activity in the fall of 2017.
“We see an engaged consumer, a healthy consumer and a very buoyant credit market.”
“We’re expecting continued GDP growth, in the two- to three-percent range,” says John Schlifske, CEO of Northwestern Mutual Insurance. “We’re not talking about breakout growth, but all the measures we track are neutral to positive” for 2018. “They’re not signaling anything that has me alarmed.”
As Jim Peck, CEO of TransUnion, the $1.7 billion credit-monitoring giant, puts it, “We just see an engaged consumer, a healthy consumer and a very buoyant credit market.”
Businesses “are doing reasonably or very well on the whole and economic growth is picking up some steam, and I think that will translate well in the new year,” says Steve Steinour, CEO of Huntington Bank, a major regional player.
“I’m traveling the country doing town hall meetings with our employees, and there are cranes in every city and development going on,” reports Steve Jones, CEO of Allied Universal, a $5 billion provider of security services, “So I look at that and ignore a lot of other metrics.”
For the first time in many years, CEOs have also built in benign economic assumptions about the rest of the world, with sustainable growth taking hold at strong levels in China and the European economy finally getting it together. “If you look at the last 30 to 50 years of globalization, the whole global economy is a lot more resilient than many people think, and everything in general is improving,” says Matt Rizai, CEO of business-software provider Workiva. “I’m very optimistic.”
To be sure, there are caveats aplenty. U.S. auto sales—still one of the economy’s biggest engines—leveled off in 2017 after a seven-year boom, and carmakers idled plants for weeks at a time. “We expect to see some continued softening of the market in 2018,” says Jim Lentz, CEO of Toyota North America. “But we still anticipate robust sales overall.”