The latest Chicago Fed Survey of Economic Conditions reveals an improved economic outlook for the upcoming year. The election of Donald Trump in November, alongside a Republican swing back to power in Washington, has already begun influencing the business world. Goldman Sachs CEO David Solomon highlighted these developments during a conference call discussing the bank's fourth-quarter results, indicating a notable shift in CEO confidence.
Solomon's remarks align with survey data suggesting renewed optimism among business leaders. The NFIB Small Business Optimism Index reached its highest level since October 2018, reflecting growing confidence. Stocks surged in the immediate aftermath of Trump's win as investors anticipated lower taxes and reduced regulations. Throughout his campaign, Trump proposed lowering taxes and easing regulatory constraints, particularly in the energy sector.
"There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election." – David Solomon
Goldman Sachs exceeded expectations in its fourth-quarter results, with profits nearly doubling compared to the previous year. Solomon noted that other CEOs feel more positive about the economy's direction and their businesses since the presidential election. This sentiment echoes across the corporate landscape, although optimism has not yet translated into loan growth, as mentioned by executives on JPMorgan Chase's earnings call.
"Additionally, there is a significant backlog from sponsors and an overall increased appetite for dealmaking supported by an improving regulatory backdrop." – David Solomon
Trump's return to the White House on Monday is expected to further bolster business confidence. However, despite this optimistic sentiment, loan growth remains stagnant according to a FactSet transcript. The improved outlook highlighted by the Chicago Fed survey indicates that while business leaders feel more confident, this has yet to fully materialize in tangible economic activity such as increased lending.