US To See Massive Corporate Spending in Wake of President Trump’s Tax Reform
Corporate America strongly backs The Trump Administration’s tax reform, and is driving spending plans to multiyear highs.
Wednesday, in a Quarterly survey released by Deloitte LLP, a record number of CEOs & CFOs said that now is a good time to take greater risks, pushing up growth expectations for revenue, earnings, capital spending and hiring.
That confident sentiment is a response to the tax bill passed in December.
Deloitte collected responses from 155 CFOs, most from companies with more than $1-B in annual revenue. More than 33% of the finance chiefs worked for manufacturing companies, a sector that could be affected by China’s retaliatory tariffs.
The survey was conducted from 12 – 23 February.
Fully, 9 in 10 respondents said economic conditions were good or very good, a high for the survey, which Deloitte began conducting in Y 2010
It’s the economy’s strength that underpins earnings optimism. Analysts surveyed expect Q-1 profits to rise by 17%
The report shows that there is a high desire for investment in the US and that is coming from just the structure of tax reform. The C-suite executives are expecting higher domestic wages, almost 40% are anticipating and planning for higher and front-loaded capital investments, and about 33% higher R&D. What they have reported is because of tax reform they are going to take these actions.
“There’s a dichotomy there versus the broader market and CFOs thinking about their own companies. It’s part of their DNA,” the Deloitte report said.
If you are a CEO and telling investors your stock’s overvalued, you are not going to be the CEO or CFO for very long.
Unless you are Tesla’s (NASDAQ:TSLA) Elon Musk.
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