SAN DIEGO (Jan. 12, 2017) — CEOs expressed record increases in optimism about economic prospects following the election of Donald Trump. The Vistage CEO Confidence Index rose to 105.2 in the 4th quarter 2016 survey, up from 91.4 in the 3rd quarter and 95.5 in the prior year’s closing quarter. The gain of 13.8 Index-points was the second largest quarterly increase since 2003, the only larger gain was when confidence began to recover from the Great Recession in 2009. While the recent improvement was concentrated in prospects for the national economy, CEOs expressed more favorable prospects for revenues and profits and planned increases in capital investments as well as an expansion in their workforce.
“The unexpected victory by Trump and the resulting upsurge in business prospects have given a new urgency to finding, hiring, training, and retaining employees. This was the most significant and challenging issue voiced by CEOs in the latest survey,” said Dr. Richard Curtin from the University of Michigan in his analysis of the survey results. “Over one-third of all firms expressed staffing and talent management as both their most significant current issue as well as their biggest challenge for 2017.
Surge in Expected Economic Growth. A strong rebound in the economy was expected during 2017. Among all CEOs, 58% expected the economy to improve during the year ahead, more than twice the 22% recorded in the 3rd quarter. This was just below the 59% in the closing quarter of 2010, but well below the peak of 81% in 2003. Recent economic gains, a reduction in economic uncertainty, and the enthusiasm over the result of the election meant that current economic conditions were also viewed more favorably. Among all CEOs, 42% thought the national economy had improved in the 4th quarter, up from 25% one quarter earlier and 21% two quarters ago.
Investment Plans. Increased investments in plant and equipment were planned by 47% of all firms in the 4th quarter, above last quarter’s 37%, reaching the highest level since the start of 2015. The recent jump represented the largest quarterly percentage gain in net investment intentions since the start of 2013.
Hiring Plans. Among all firms, 60% planned to expand their workforce in the 4th quarter survey, up from last quarter’s 54% and last year’s 55%. Taking into account increases as well as decreases, the latest survey had the most positive net employment intentions in ten years, dating back to the start of 2006. What makes the surge in hiring intentions remarkable was that it occurred so late in the current expansion.
Revenues & Profits. Revenue gains were expected by 78% of all firms, up from 64% last quarter, and the most positive revenue expectation in the past ten years. Even at the height of the last expansion, the peak percentage that anticipated higher revenues was only marginally higher at 83% at the start of 2006.
Rising profits were expected by 64% of all firms, up from 54% last quarter, which was also the highest proportion recorded since the start of 2006.
Read the full Q4 2016 Vistage CEO Confidence Index results here.
About the Vistage CEO Confidence Index
The Vistage CEO Confidence Index, established in 2003, is a quarterly survey of small- to mid-sized business CEOs about the U.S. economy. The Q4 2016 Vistage CEO Confidence Index includes responses from 1,398 U.S. CEOs, surveyed between December 5 and December 14, 2016. Since its establishment in 2003, the Index has proven to be a reliable indicator for changes in GDP and employment, two to three quarters hence.