CEOs Remain in High Spirits as Corporate Tax Cuts Loom

The election of Donald Trump lifted CEO confidence in the U.S. to its highest level in two years, a new survey found, indicating expectations of tax cuts, rule relaxations and infrastructure spending may be outshining concerns about trade protectionism.

The global quarterly survey of 1,514 CEOs—including 638 in the U.S.—was conducted over the first two weeks of January by leadership peer group YPO. It found that American CEO confidence levels jumped 4.2 points to 64.6 from the previous quarter, outpacing a 3.0 rise globally to 62.2.

The timing of the survey, around two months after Trump’s election victory, meant respondents would have had plenty of time to digest the then president-elect’s policy priorities. To be sure, they were questioned before an inauguration speech that featured heavily on protectionist rhetoric and the recent bout of CEO resistence to Trump’s controversial immigration ban.

Conversely, Chief Executive’s February 2017 CEO Confidence Index’s overall rating is down slightly, after three months of increases following the election. In the CEO Confidence Index survey, CEOs are asked to rate their confidence in future business conditions 12 months from now on a scale of 1 to 10 with 10 being highest. In February, the first month after President Trump took office, CEOs gave an overall confidence rating of 6.99, compared with 6.54, 6.93 and 7.07 for November, December and January, respectively.

“After months of uncertainty in the run up to the presidential election, chief executives are feeling that the United States has a clear economic plan, based on a pro-business agenda,” Clear Summit Group managing director and YPO member Dan Monaghan said.

A clear majority (63%) of U.S. respondents to the YPO survey predicted that economic conditions would improve in the next six months, while just 7% expected them to deteriorate. That’s a significant improvement over the previous quarter, when just 33% saw conditions improving.

Confidence in the economic outlook translated to a more upbeat view on financial performance and investment, with 72% of U.S. YPO respondents expecting to increase revenue in the next 12 months and 43% forecasting a headcount increase over the same time period.

However, a recently-released global CEO survey by PwC found that while confidence is indeed rising, it’s edging up slowly and still remains well below high points reached in 2007.