American chief executives are more positive about the US economy than they’ve been at any time in the past two years, according to a recent survey.
The Conference Board’s index of CEO confidence rose to 53, above the 50 level that suggests optimism about the economy, the latest report showed. This is the first time the index has exceeded 50 since the first quarter of 2022. It was at 46 in the last three months of 2023.
Source: The Conference Board
The greatest domestic challenge affecting businesses this year, according to CEOs surveyed, is political uncertainty ahead of US elections, cited by 51%. The spread of existing wars was cited by 46% of those surveyed as the biggest risk.
The two main developments the CEOs flagged as benefiting business were reduced inflation, with 34% picking this point, and US Federal Reserve (Fed) interest rate cuts, chosen by 28% of those surveyed as a tailwind.
The survey showed that 36% of respondents expect economic conditions to improve in the coming six months, up from 19% last quarter. In turn, 27% expect conditions to worsen, versus 47% in the previous survey.
Perhaps reflecting this confidence, the S&P 500 index reached the 5,000 level for a new record high on 9 February. The combination of growing profits and expectations that the Fed will be cutting rates could exert a powerful effect on the stock market — especially since analysts’ estimates heading into earnings season looked too low. Earnings per share for companies in the S&P 500 are now tracking up ~9%, double the 4.5% analysts had previously expected at the end of last year.
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