Markets have been cruising to record highs, and there’s no doubt that this has been spurred on by an increasingly positive outlook. Reflecting this, the Business Roundtable released its CEO Economic Outlook Index for the fourth quarter.
For some quick background: the CEO Economic Index is a composite of CEO projections for sales and plans for capital spending and hiring over the next six months.
The index increased to 96.8 for the fourth quarter, up from 94.5 in the third. It reached its highest level since the first quarter of 2012 (96.9). The index has significantly exceeded its historical average of 80.3 for four quarters in a row and remains well above 50, suggesting that CEOs continue to expect the U.S. economy to expand at a healthy pace.
Accordingly, CEO plans for capital investment rose to their highest level since the second quarter of 2011. Expectations for sales picked up by 5.1 points. Hiring plans dipped 4.5 points from the third quarter but remain near their highest level in four years.
In their first gross domestic product estimate for 2018, CEOs project 2.5% GDP growth for the year.
Jamie Dimon, board chair and chief executive of JPMorgan and chairman of Business Roundtable commented:
The U.S. economy is strong, and business leaders are increasingly confident in continued economic growth, marked especially by their plans for additional capital investment. This business confidence rests on the pro-growth economic agenda of policymakers. To continue this momentum, it is critical that we enact pro-growth tax reform that will level the playing field for U.S. business to be globally competitive.
Joshua Bolten, Business Roundtable president and CEO added:
The easing of cost pressures tied to regulation has contributed to continued confidence in the economy. More progress toward smarter regulation coupled with enactment of pro-growth tax reform this year will keep building on U.S. economic momentum.