Tariffs dim CEO confidence, according to July WSJ/Vistage survey


Optimism for future economic growth among CEOs fell to its lowest level since the presidential election, due in part to concerns over tariffs.The economic optimism of small-business CEOs continues to decline, according to the latest results from the Wall Street Journal/Vistage Small Business CEO Survey. The CEO Confidence Index measured 108.2 in the July 2018 survey, compared to 110.8 one month ago and 110.0 one year ago. This is well below the peak of 120.5 recorded in January and the lowest level since the 2016 presidential election.

“The January peak was likely due to the tax reform legislation, and it is not surprising that the initial enthusiasm has faded,” says Dr. Richard Curtin, a researcher from the University of Michigan who analyzed the survey results. “The continued declines over the past six months suggest that other factors aside from tax reform may be responsible, and the current administration’s trade policy may be the primary reason. Whether one agrees or disagrees with the aim of the policy, the imposition of tariffs will cause economic disruptions.”

Other key findings from the July 2018 survey, which had 791 respondents, include the following.


Concerns over tariffs weaken economic outlook

In the July survey, less than one-third of small-business CEOs (27%) said they expect the economy to grow in the year ahead. By comparison, in January, more than half of CEOs (54%) were optimistic about economic growth.

About 60% of CEOs thought the U.S. economy has recently improved, which is consistent with the past several months but higher than what was recorded one year ago (53%).

Tariffs appear to be the main reason for declining optimism. “Since the size and timing of the tariffs is unspecified, it is only natural that uncertainty about future economic prospects would increase,” says Curtin. “While CEOs may be uncertain about whether their business will be directly affected, they could have inferred that the overall pace of economic growth in the domestic economy will slow in the year ahead.”

 

 

 

 

 

 


Most CEOs anticipate revenue and profit growth

Expectations for revenue and profit growth fell from peak levels but remained at favorable levels in the July survey.

More than three-quarters of CEOs (76%) said they anticipate revenue growth this year, compared to 83% at the start of 2018.

Nearly two-thirds (62%) said they expect profit growth this year, compared to the peak level of 70% recorded three months ago.

Consistent with one year ago, only 5% of CEOs said they anticipate revenues to decrease, and only 8% anticipate declining profits.

 

 


Fewer firms plan for expansion

In July, less than half of small firms (47%) said they planned to increase their investments in new plant and equipment. This is below the peak of 52% recorded in January but equal to the ratio recorded one year ago.

 

 

 

 


Majority of firms to increase hiring

The majority of small firms (62%) expect to increase their hiring in the year ahead. This is below the peak of 72% recorded in late 2017, but higher than the percentage recorded one year ago (59%).

In addition, 81% of all small firms reported hiring in the past quarter. About 10% of CEOs reported that their firms’ expansion was due to seasonal factors, while 13% of CEOs reported that their firm was impacted by changes in immigration policy.

“Despite the small reduction in anticipated expansion of their workforces, the hiring plans of small firms strongly suggest that the labor market will remain quite tight during the year ahead,” says Curtin.

Read the full report

View full infographic

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

Predefined Skins

Primary Color

Background Color

Example Patterns

demo demo demo demo demo demo demo demo demo demo

Privacy Policy Settings

  • Required Cookies
  • Performance Cookies
  • Functional Cookies
  • Advertising Cookies
These cookies are essential in order to enable you to move around the Sites and use its features, such as accessing secure areas of the Sites and using Vistage’s Services. Since these cookies are essential to operate Vistage’s Sites and Services, there is no option to opt out of these cookies.
These cookies collect information about how visitors our Sites, for instance which pages visitors go to most often. These cookies don’t collect information that identifies a visitor. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Cookies used

Visual Web Optimizer
These cookies remember information you have entered or choices you make (e.g. as your username, language, or your region), and provide enhanced, more personal features. They may also be used to provide services you have asked for such as watching a video or commenting on a blog. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.

Cookies used

Google Analytics
GTM
Gravity Forms
These cookies are used to make advertising more relevant to you and your interests. The cookies are usually placed by third party advertising networks. They remember the websites you visit and that information is shared with other parties such as advertisers. If you do not allow these cookies, you will experience less targeted advertising.