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Business Roundtable Survey: Surging CEO Confidence and Increased Capital Spending Plans

The recent Business Roundtable survey revealed increasing optimism among CEOs, providing a comprehensive view of the improving outlook among top executives and economists across a wide array of industries. Economists representing companies ranging from Morgan Stanley to General Motors, and from Barclays to Eaton Corp., have revised their GDP growth forecast for 2024 upwards to 2.3 percent from the previous estimate of 2.1 percent back in January, according to the survey.

This upward revision reflects a growing confidence in the economic trajectory. Notably, an overwhelming 88 percent of economists now anticipate a "smooth-landing" scenario for the Federal Reserve, marking a significant increase from the 67 percent who held the same view just a few months ago. This consensus reflects a belief that the Fed's tight monetary policy will successfully tame inflation, aligning it with the Fed's 2 percent target.

Similarly, this latest survey from the Business Roundtable also revealed a surge in CEO optimism, reaching its highest level in two years. This uptick in confidence is attributed to easing inflationary pressures and the Federal Reserve's intention to begin scaling back borrowing costs, which are set to be the highest in 23 years. The positive sentiment among CEOs and executives is expected to translate into increased spending on fixed investments, as indicated by the notable 26 percent rise in the Business Roundtable index for capital investment compared to the previous quarter. Economists anticipate a further 2.1 percent expansion in fixed investment over the next 12 months, underlining a growing confidence in sustained economic growth.

Despite the optimism, there are concerns that a sudden surge in spending could lead to renewed inflationary pressures, potentially disturbing the delicate balance between supply and demand. Atlanta Fed President Rapheal Bostic highlighted this risk in a recent speech, emphasizing the need for vigilance in monitoring economic developments. However, he also noted the readiness of business leaders to seize opportunities for growth and investment when conditions are favorable, reflecting a broader sentiment of expectant optimism among C-suite executives. As businesses navigate the evolving economic landscape, careful consideration of potential risks alongside proactive investment strategies will be essential in driving sustainable growth and resilience.

If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced fractional or outsourced CFO to help your company control costs, increase profit margins, improve cash flow as well as identify strategic growth opportunities, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.

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