The market may be selling off over fears of inflation and concerns that worker shortages may stunt the recovery, but CEO confidence has reached its highest level since 1976 as the economy roars back to life, according to the Conference Board’s latest sentiment survey.
KEY FACTS
In the second quarter, 94% of the more than 100 CEOs surveyed said that economic conditions are better than they were six months ago, the Conference Board reported, up from 67% in the prior quarter.
Just 1% of CEOs said they expect economic conditions to get worse, down from 7% in the first quarter, while 88% said they expect conditions to improve over the next six months, compared to 82% last quarter.
BIG NUMBER
82. That’s the Conference’s Board’s assessment of CEO confidence in the second quarter, up from 73 in the first quarter. A reading of above 50 in the index indicates more positive responses than negative responses about conditions in the economy, the think tank said. The reading dropped to a low of 34 during the beginning of the pandemic last year.
CRUCIAL QUOTE
“I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” JPMorgan’s billionaire CEO Jamie Dimon wrote in his annual letter to shareholders earlier this spring. Dimon’s previous message to shareholders took a very different tone: “we don't know exactly what the future will hold,” he wrote in April 2020, “but at a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008.”
KEY BACKGROUND
Stocks were down Wednesday, setting the stage for three straight days of losses, driven in part by investor concerns about inflation despite blowout earnings in the retail sector on Tuesday. “Such is the state of play in the financial markets now, with conflicting themes and galactic bull runs sowing confusion and fear amongst the retail momentum-driven buy-everything mafia,” OANDA senior market analyst Jeffrey Halley wrote in a Wednesday note. In a memo released Tuesday, White House economists Brian Deese and Cecilia Rouse reiterated that they expect it to take time for supply and demand imbalances to normalize as the economy reopens, meaning that prices and wages may spike in the near-term. “We do not see signs of persistent dislocation or long-term inflation,” they wrote.
WHAT TO WATCH FOR
Investors will be watching closely for any clues about inflation when the Federal Reserve releases the minutes of its April meeting Wednesday afternoon.
This article originally appeared on Forbes.
