It’s well-known that people like to spend money when they’re happy. Well, as our featured chart this week shows, that’s true for CEOs too.
On the bottom half of the chart above, we have the CEO Confidence Index, which measures how optimistic America’s CEOs are about the economy one year from now. As you can see, while it’s lower than it has been for most of the past five years, it has improved dramatically since the recent low reading in mid-2022.
This is important because CEO expectations correlate strongly with business spending and investment. On the top half of the chart, we show the year-to-year change in the capital expenditures of major U.S. companies. This series follows the trends in CEO confidence by about 3 to 6 months.
Therefore, the recent uptick in CEO confidence means we could see a significant increase in spending and investment in America’s businesses over the next year or so. For the most part, this could result in stronger corporate earnings and a more robust economy, which we view as a positive sign for U.S. stocks going forward. Of course, this is only one of many things investors should focus on, but it is an encouraging sign compared to last year.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.