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Improved Economy Bolsters CEO Confidence, according to Q1 2017 Vistage CEO Confidence Index Survey

Staff Report

Friday, April 14th, 2017

A rebound in CEOs' perceptions of economic growth, combined with a more favorable outlook for the economy, has created a new optimism following the presidential election. The Vistage CEO Confidence Index was 106.9 in the 1st quarter 2017 survey, slightly above the 105.2 in last quarter's survey, and well above the 3rd quarter reading of 91.4. Although the surge in optimism has thus far only restored confidence to the highs recorded following the Great Recession, the return of optimism to the highs of the past few years has meant that CEOs anticipate favorable trends in their revenues and profits.

"While most firms would like the new administration's policies implemented as soon as possible, a slower start has not diminished their willingness to increase fixed investment spending and expand their workforce," said Dr. Richard Curtin, University of Michigan. "Not all firms will be pleased with the details of new policies and changes in regulations, but stronger economic growth can ease any potential concerns about the details or the timing of their implementation."

Survey highlights include:

  • Economic Growth Rebounds. 57% of CEOs expect the economy to post additional gains during the year ahead, more than twice the 23% who expected improvement a year ago.

  • Robust Hiring Plans. 60% of all CEOs plan to expand their workforce in the year ahead.

  • Record Revenues & Profits. 77% of CEOs expect increased revenues, and 64% expect increased profits in the year ahead. 

  • Strong Investment Spending. 47% of CEOs expect to increase investment expenditures in the next year, barely below the decade peak of 49% set in the closing quarter of 2014.

One might anticipate that given the resurgence in optimism, firms would be more willing to take on more debt to expand their business. 51% of CEOs said they were willing to take on more debt in order to grow their business. The choice of obtaining capital from loans or equity was clearly tilted toward loans: just 13% favored equity, while 47% favored loans, and 40% favored using a combination of equity and loans. Conventional banks were reported by 3 in 4 firms as the most likely source of loans. Just 7% had an SBA loan, half of the 15% that had an SBA loan in the past, and 13% were currently considering taking out an SBA loan.