Execs say Trump is good for US business
A recent poll shows a majority of US executives say Trump’s administration will benefit their businesses.
—A recent annual survey found that 76 percent of US executives polled say the new White House administration will have a positive impact on their bottom line.
The survey, conducted by JPMorgan Chase, also showed that 80 percent of mid-market executives are optimistic about the current business climate, a 39 percent hike from the same survey last year.
Citing the Trump administration’s pro-business agenda, including both tax breaks and reduced corporate regulation, middle-market businesses – a demographic defined by overall revenues of between $20- and $500-million – feel secure about an upcoming period of growth.
Optimism is at its highest level, and pessimism at its lowest level, in seven years.
“U.S. companies are gaining confidence, and they anticipate new economic support from Washington in the coming year,” said Jim Glassman, a senior economist at JPMorgan Chase, in a statement quoted by Bloomberg News. “Even some of their top business challenges – managing labor costs and trying to tap a limited supply of talent – are more growing pains than survival tactics.”
While the survey, which ended on Jan. 20, the day of President Trump’s inauguration, never mentioned Mr. Trump by name, the “new administration” as it was referred to in questions, campaigned on a platform of tax cuts, infrastructure improvements, and import tariffs designed at boosting U.S.-based manufacturing.
In a question regarding the order of priorities for said administration, respondents replied that reduced regulations should be first and foremost, followed by tax decreases and increased infrastructure spending.
The foreseen benefits among mid-market corporations may not be restricted to company executives as 57 percent of those polled expressed their intention to hire more full-time employees, and an additional 71 percent plan to raise wages, reported CNN Money.
But 38 percent of the same companies are concerned about the availability of skilled workers, with 43 percent of responders expressing concern over finding employees with technical or trade skills, though managerial skills are also notably absent.
While the overall increase in business confidence represents a significant improvement over the same poll from last year, Glassman points out that Trump and his business-friendly administration are not the only factors influencing poll results.
He points out that the numbers from January 2016 reflect a period of market turmoil with oil prices decreasing dramatically and general economic volatility in China.
"You were catching people at a time of significant worry," Glassman said, referring to the 2016 survey. "It's not surprising to me that they were pretty glum when we took the [previous] survey in January.”
Meanwhile, examples of a strengthened economy can already be seen. Walmart recorded their strongest quarter since July 2012, surpassing analyst expectations following heavy investments in both their stores and their e-commerce operations, seeking to remain competitive with companies like Amazon, reports CNBC.
Home Depot also showed unexpected strength, reporting 5.8 percent sales growth at locations open at least a year, higher than analyst estimates of 3.5 percent. Profit of $1.44 a share was higher than $1.17 a year earlier and exceeded estimates of $1.34, resulting in increasing their dividend and authorizing a $15 billion stock buyback program.
The strong optimism expressed by the middle-market executives in the national survey doesn’t fully carry over to everyone. Only 62 percent of small business executives say they are confident in the overall market strength, up from 43 percent last year.
In an article for Barron's titled "A Tale of Two Trumps," John Kimelman outlines this very dichotomy. On one hand, the President stirs confidence among executives and investors alike. "It was this Trump who fired up the market in the first trading day after the Nov. 8 election, when the Standard & Poor’s 500 index gained an impressive 1.1%," Kimelman writes. However, there is also the "Disrupter-in-Chief," President Trump with "little regard for the political etiquette of a traditional presidency."
With these two versions of the same man working side-by-side in the Oval Office, much remains to be seen regarding the future of the US economy, Mr. Kimelman says.
Still, Trump has inherited one of the strongest economies of any US President in recent history. If he can maintain the conditions that helped promote the sense of confidence demonstrated in the recent survey, analysts see the possibility of a continuing bull market.