CEOs express optimism about Trump’s plans for taxes, spending

US President Donald J. Trump participates in a forum with business leaders
Jamie Dimon, left, chief executive of JPMorgan Chase & Co., joins President Trump before a White House forum with business leaders on Feb. 3.
(Michael Reynolds / EPA)

The nation’s top chief executives like what they’re seeing and hearing from President Trump and his fellow Republicans, according to survey results released Tuesday by the Business Roundtable.

The economic expectations of the heads of the nation’s largest companies jumped in the first quarter by the most in more than seven years amid optimism about corporate tax cuts, reduced regulations and a boost in infrastructure spending promised by Trump and congressional leaders, the trade group found.

“I think it validated what I’ve already felt and have already seen … that there’s more optimism around the future of the economy than we’ve had in quite some time,” said Michael Burke, chief executive of Los Angeles engineering giant Aecom.

“I think validating that optimism among a CEO group that is responsible for a big part of the investments that are going to be part of the U.S. economy is encouraging,” said Burke, a member of the Business Roundtable.


The organization, composed of the heads of about 200 of the largest U.S companies, said its quarterly CEO Economic Outlook Index shot up to 93.3 from 74.2 in the fourth quarter of last year.

It was the biggest increase since the third quarter of 2009 and the highest level in nearly three years. The index is based on projections for sales, capital spending and hiring over the next six months, and ranges from -50 to 150, with a reading above 50 indicating that the economy is expanding.

Since the survey began in 2002, the average has been 79.8. The first quarter was the first time that the index has been above its historical average in nearly two years.

The increased optimism from major corporate chieftains echoed surveys showing small-business owners and consumers also are feeling much better about the economy since Trump’s election. Investors also have been bullish since the election, pushing the Dow Jones industrial average up about 14% to record highs.


Also on Tuesday, the National Federation of Independent Business said its Small Business Optimism Index was near a 43-year high in February after ticking down a bit from the previous month.

“It is clear from our data that optimism skyrocketed after the election because small-business owners anticipated a change in policy,” NFIB President Juanita Duggan said.

“The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November,” she said. “If the healthcare and tax policy discussions continue without action, optimism will fade.”

The 141 CEOs surveyed by the Business Roundtable between Feb. 8 and March 1 projected that the U.S. economy would expand 2.2% this year. That was up from a 2% prediction in December but still well below the 3% to 4% annual growth Trump said he could produce.

Boosting growth to that level will be difficult. The economy expanded just 1.6% last year and hasn’t grown more than 3% since 2005.

“I think the CEOs generally and strongly feel we can do a lot better than we’re doing,” said Jamie Dimon, chief executive of JPMorgan Chase & Co. and this year’s Business Roundtable chairman. “We’re not believers that we’re someone stuck in low growth.… We just need good policy at this point.”

Asked about the best way that Washington could boost their company’s growth, 52% of survey respondents said tax reform, 27% said regulatory reforms and 15% said infrastructure investment.

All three are top priorities of Trump, who has had several meetings with business executives at the White House since taking office.


“We’re bringing back jobs, we’re bringing down your taxes, we’re getting rid of your regulations,” Trump said at a Feb. 3 meeting that included Dimon and other top CEOs. “I think it’s gonna be some really very exciting times ahead.”

Treasury Secretary Steven Mnuchin said the administration wants to enact a tax overhaul by August. The plan, still being crafted by congressional Republicans, would slash the 35% corporate tax rate, the highest in the industrialized world. The administration also wants to cut taxes for middle-class workers.

But tax reform, like other Trump initiatives, could face troubles in Congress. Democrats are united in their opposition to most of Trump’s plans and Republicans concerned about federal spending could balk at policies that increase the deficit.

House leaders want to include a controversial border adjustment tax, which would subject importers to higher taxes than exporters or those that produce products in the U.S. for domestic consumption. Businesses are split on that, with opposition from retailers who import a lot of goods.

Trump already has taken steps to reduce regulations. He’s halted or delayed some Obama administration initiatives, such as sweeping clean water rules and conflict-of-interest rules for retirement advisors.

Trump also has decreed that federal agencies must cut two regulations for every one they add. And he’s ordered a review of the 2010 Dodd-Frank act, which tightened financial regulations.

In his address to Congress this month, Trump called for $1 billion in spending on roads, bridges and other infrastructure financed through public and private capital.

Infrastructure is especially important for Aecom. CEO Burke said there is bipartisan backing in Washington for a “renewed focus and investment in infrastructure,” and noted taxpayer support, such as the Measure M transit tax approved last year in Los Angeles.


“I do feel we’re at a unique moment in history where we have the stars aligned … to address the infrastructure problems,” Burke said.

Another Business Roundtable member, Bob Sulentic, chief executive of Los Angeles real estate services firm CBRE Group Inc., said Trump’s plans could be a boost for his business.

“To the extent that the fiscal policies being discussed in Washington, D.C. — including personal and corporate income tax cuts, infrastructure spending and lighter financial regulations — spur increased economic activity, this could be very good for commercial real estate,” Sulentic said. “Of course, the specific details and timing of any such plans remain to be seen.”

Business Roundtable President Joshua Bolten said it was difficult to determine the effect on the index of Trump taking office, as opposed to rising optimism because of the improving economy. But “certainly a big part of it has to be the political environment here in Washington,” he said.

Asked if business confidence would tumble if Trump’s plans stall, Bolten said he expected the policies to be enacted.

“There’s obviously a lot of turbulence around the healthcare act but the other elements of the agenda, we think, are well on track,” he said.

Times staff writers Samantha Masunaga and Roger Vincent in Los Angeles contributed to this report.

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4:30 p.m.: This article was updated with comments from Michael Burke of Aecom, Bob Sulentic of CBRE Group, additional information on Trump’s policies and the results of a survey by the National Federation of Independent Business.

This article originally was published at 9:35 a.m.

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