Confidence among America’s business leaders continues to improve. For example, the Business Roundtable’s CEO economic outlook index rose to 96.8 in Q4 2017, the 5th quarterly gain in a row and the highest reading since Q1 2012. That is also a nearly 40 percent jump from pre-election levels that reflects broad improvements in executives’ expectations for sales, capital spending, and job creation. Smaller business owners have also experienced substantial gains in overall confidence lately, as evidenced by the past few updates to the National Federation of Independent Business’s (NFIB’s) optimism index. Similarly, a gauge of small business owner sentiment from Wells Fargo and Gallup has risen this quarter to 107.0, the best reading of the current economic cycle and just fractionally below the all-time high.
All of these surveys saw their confidence gauges spike after President Donald Trump’s election victory because of expectations that the new administration and Congress will together cut taxes, invest in infrastructure, reduce regulations, and adopt other policies that are supportive of business and economic growth in general. With respect to deregulation, the Wells Fargo survey noted that a growing proportion of business owners said that “the onslaught of regulations seen earlier in the business cycle has either let up or been reversed.” As for tax cuts, the recent reform package passed in Congress, combined with an overall healthy U.S. economy, helps explain why the proportion of surveyed small business owners expecting revenues to increase over the next 12 months jumped to a new record in Q1 2018. Further, the proportion of business owners expecting to increase capital spending matched the all-time high this quarter, and the proportion of firms stating they plan to increase capital spending "a lot" rose to new record. The report’s authors added that “employment tends to rise more or less in line with capital spending,” but stressed that “a high proportion of business owners continue to report that they are having difficulty finding the workers they need.”
Sources: Business Roundtable, NFIB, Wells Fargo, GallupPost author: Charles Couch