CEO optimism regarding the economic outlook has reached its highest point in two years, with more than one-third of top executives anticipating a positive shift in the next six months, according to a recent survey conducted by the Conference Board and Business Council. The survey revealed that CEO confidence rose as inflation abated, and the Federal Reserve signaled a forthcoming reduction in borrowing costs, the most significant in 23 years.
Business Council Vice Chairman Roger Ferguson highlighted the notable improvement in CEO sentiment, emphasizing a 24 percentage point surge, with 32% of surveyed CEOs expressing that economic conditions have brightened in the past six months. Furthermore, 36% of CEOs foresee an improved economic outlook in the next six months, a substantial increase from the 19% recorded in the previous quarter.
Despite the positive outlook, Ferguson pointed out that top executives maintain a sense of caution, with 51% identifying political uncertainty in this election year as the most significant business challenge. Looking globally, 46% of respondents expressed concern about the business threat posed by the spread of ongoing wars.
This CEO survey aligns with findings by Wolters Kluwer, indicating that 87% of large-company economists anticipate a "soft landing" for the U.S. economy, avoiding a recession as tight monetary policy addresses inflation concerns. The survey highlighted a shift in economists' views, with 67% holding this optimistic outlook in December.
A broader economic perspective, as shared by economists from companies including Visa, KPMG, Ford, and JPMorgan Chase, supports the positive trajectory. Median estimates for real gross domestic product (GDP) growth in 2024 have been revised upward to 2.1% from 1.6% in January, according to a Wolters Kluwer survey of over 50 economists.
Richmond Fed President Tom Barkin echoed the sentiment, stating that discussions about a recession have shifted toward the concept of a "soft landing," particularly evident in sectors beyond interest-sensitive areas like banking and real estate.
Goldman Sachs Chief Economist Jan Hatzius acknowledged robust economic indicators, citing a 4.1% annualized GDP growth during the second half of last year and a significant increase in hiring in January. However, Hatzius emphasized that the economy is not likely to overheat, predicting a gradual reduction in the federal funds rate by the Fed.
The survey also highlighted key factors contributing to CEO confidence, with 34% believing that slowing inflation will benefit businesses the most this year, while 28% cited an easing in monetary policy as a favorable change. As CEOs navigate these dynamic economic conditions, the overarching sentiment is one of hope, tempered with a cautious approach to ensure sustained and broad-based economic recovery.
