Following the election of Donald Trump, chief financial officers in the United States reported their highest levels of optimism in nearly a decade.
Those levels of optimism were related in particular to regulatory and tax reform, two issues always high on the list of business concerns.
The findings come from the latest Duke University/CFO Global Business Outlook survey conducted by Duke’s Fuqua School of Business.
John Graham, a Fuqua finance professor and director of the survey, said he was initially surprised by the results, especially given that so much uncertainty had surrounded Trumps candidacy. The more he thought about the business implications under a Trump presidency, the more it made sense to him.
“The business community is optimistic about Donald Trump being president because of the anticipation that corporate tax rates will be cut as well as less regulation,” he said.
In this quarter’s survey, which took place after the election, the CFO Optimism Index jumped sharply to 66, the highest level in nearly a decade. What’s more, those CFOs who reported being more optimistic outnumbered those reporting less optimism by a margin of four to one, one of the highest margins in survey history. Historically, high optimism in this survey has been correlated with strong employment growth and rising GDP over the next year.
“The CFOs are telling us that they anticipate pro-business policies to be enacted in the near future,” said Graham. “But until specific policy details are known, many are waiting to see how their own firms will navigate the new terrain.”
Still, there was a sharp drop in optimism as it relates to the Mexican economy and others south of the border. Graham said he ties that drop to something other than a wall.
“Not so much about immigration, I don’t think, but more worries about trade deals being renegotiated and basically the business environment worsening in Mexico,” he said.
Also, a rising economic tide doesn’t always raise all ships. “It could well be true that these changes will benefit businesses at a corporate level though not necessarily all of the employees all the way down the line,” he said.
The survey, which closed Dec. 2 and is conducted jointly with CFO Magazine, has taken place each quarter for more than 20 years and spans the globe.