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CEO optimism on the rise

By  - 3/17/2017 12:13:27 PM
There is plenty to disagree about regarding President Donald Trump and what his administration has done since he took office, but at least one thing is inarguable: CEOs like him, or at least his plans for tax reform and business regulation.
 
The Business Roundtable, an association of CEOs of America’s leading companies, this week released the results of its first-quarter 2017 CEO Economic Outlook Survey. The survey asks member CEOs about their companies’ plans for the next six months, and the first-quarter numbers are positive across the board.
 
CEO plans for hiring, sales and capital expenses all increased by at least 18 points over the previous quarter. Regarding sales, 78 percent of CEOs surveyed expect an increase over the next six months, while only 4 percent expect a decrease. For capital expenses, 46 percent expect an increase, while 13 percent project a decrease. For employment, 41 percent of CEOs project an increase and 18 percent expect a decrease.
 
CEOs’ projection for GDP growth in 2017, 2.2 percent, grew slightly from the projection they made in December. The CEO Economic Outlook index—a composite index of CEOs’ plans for sales, spending and employment—jumped to 93.3 after hovering at 69.4 to 74.2 throughout 2016.
 
These are all impressive numbers, and hopefully they correctly indicate continued growth in the economy both nationally and locally. However, one has to be concerned that part of the optimism on the part of the CEOs is based on something that may not come to fruition: tax reform.
 
Trump has proposed massive changes to the tax code. But it has been more than 30 years since the last major tax reform—the Tax Reform Act of 1986—and that came about as the result of widespread bipartisan collaboration.

There seems to be no appetite for such bipartisan reform in today’s political climate. If Trump’s tax reform fails to materialize, CEO optimism could disappear with it. 

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