Private Company Leaders Confident in U.S. Economy
By April Hall
Executives at privately held companies feel more confident in the economy, but are less optimistic about growth, according to a new report.
PwC’s quarterly survey of CEOs and CFOs at private companies found that 69% are optimistic about the nation’s economic health, up from 28% from the year-ago quarter.
Ken Esch, PwC’s Private Company Services and Trendsetter Barometer leader, offers four reasons:
• “First, we have experienced a sustained (albeit moderate) increase in demand for products and services since the Great Recession. That trajectory of demand created confidence among business leaders.”
• “Second, businesses have created and filled millions of new jobs and real wages, adjusted for inflation, are growing. That has helped increase demand for products and services.”
• “Third, we have experienced an explosion of new technologies that improve business processes and customer interaction. Those technological improvements not only help grow the top line, they enhance profitability.”
• “Finally, businesses have access to capital at historically low rates.”
Although overall the executives feel positive, they still have concerns, particularly about growth.
For example, 30% of the executives worry competition from outside of the United States could hinder growth. That’s up 13% from the same time last year.
“Uncertainty about the direction of U.S. and global trade policy at the moment is not helpful for companies looking to capitalize on opportunities overseas,” Esch explains. “The world is not standing still as the U.S. and the U.K. sort out ways to upgrade their trade relations.”
In fact, it’s not just trade policy that could hinder private companies. According to the survey, policy in general under President Trump is a concern.
Executives cite policy matters as the top business growth barrier, with 63% of those surveyed in agreement.
“In general, policy does two things from a business perspective: Sets the rules and this in turn creates opportunities as well as costs. Whenever any of these factors are uncertain, private companies are no different than other business,” Esch notes.
Some business leaders, he continues, “will decide to hold back on investments and other activities until they’re more confident on the rules, costs of compliance or the opportunities that changing policy conditions always create.”
So what does the future hold?
PwC’s findings, Esch maintains, “show that confidence in the progress of reforms to corporate tax and regulations over the next few months will be a pivotal factor in private-company hiring and investment planning.”
The full report can be found here.