Quick Bites | In the US, CEO confidence is surging

Coming on the heels of US Federal Reserve (Fed) chair Jerome Powell testifying before Congress that interest rate cuts are coming this year, but not imminently, another report shows that confidence levels amongst US CEOs is surging.

Source: Axios

 

America’s top executives are more confident about the economy, with expectations of stronger sales and capital investments — plans that indicate the economy might keep booming in the months ahead.

For the first time in two years, the Business Roundtable’s quarterly gauge of CEOs is above its historical average, signalling that business leaders’ economic uneasiness may finally be fading.

The index jumped by 11 points in the first quarter to 85 — topping the long-running average by 2 points.                That double-digit surge reflects a larger share of CEOs planning to increase capital spending (investments in equipment, factories and the like) and expectations of stronger company sales relative to the previous quarter. The sub-index for capital spending over the next six months surged by 16 points; the sales sub-index surged by 13 points.

Plans for hiring edged up more modestly, by 5 points. That sub-index remains depressed relative to two years ago, a sign that the rapid hiring rates of a few months ago have been replaced with more modest employment plans.

The survey results underscore the resiliency of the US economy and suggest accelerating economic activity over the next six months.

In a speech last week, Atlanta Fed CEO Raphael Bostic flagged rising optimism among business leaders, including some he said were, “ready to deploy assets and ramp up hiring when the time is right.” But on the downside, Bostic worried that activity on a large enough scale could, “unleash a burst of new demand that could reverse the progress toward rebalancing supply and demand” and reignite inflation.

Yet most US CEOs don’t necessarily envision blowout economic growth in the year ahead. Instead, they see an economy that keeps growing steadily at a healthy pace. They expect GDP growth of 2.1% this year, up slightly from their last estimate of 1.9%.

 

Consensus forecasts for real US GDP growth in 2024 have been ratcheting up since last September.

Source: UBS, FT 

 

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