The U.S. is currently driving the global economy, and a look at the latest YPO Global Pulse survey and confidence index show that U.S. CEOs believe their businesses are up to the task for at least a while longer.
U.S. CEOs' intentions for the next 12 months revealed in the YPO survey include the following bullish indicators:
- 70 percent of U.S. CEOs anticipate sales increases in excess of 10 percent, whereas only 4 percent see a sales decrease in excess of 10 percent.
- 45 percent of U.S. CEOs anticipate increasing their employee headcounts by greater than 10 percent, whereas only 4 percent see a headcount decrease in excess of 10 percent.
- 47 percent of U.S. CEOs anticipate capital expenditure increases in excess of 10 percent, whereas only 5 percent see capital expenditure decreases in excess of 10 percent.
Just how strong is America's economic resurgence? Whereas U.S. GDP is now about 8 percent above its pre-2008 financial-crisis peak, the economies in the Euro zone and Japan remain lower than they were at their respective peaks in early 2008. Meanwhile, China's economic growth rate is slowing, and Russia is in a recession.
In fact, at a 3.6 percent projected pace of growth for 2015 per the International Monetary Fund (IMF), America's economic growth looking forward is projected to rise at almost the same pace (4.3 percent) as that of emerging market countries! That narrow 0.7 percent spread is a far cry from the 6.5 percent difference in rates of economic growth that emerging markets had over America back in 2007.
Even more impressive, among the world's 10 largest exporting countries, only China now has lower average manufacturing costs than the U.S., according to the Boston Consulting Group. Indeed, American manufacturers, with an improved use of technology and elevated levels of worker productivity, even have a cost-competitive advantage over South Korea today.
A confident CEO is a CEO who hires workers and buys property, plant and equipment to grow corporate operations. In turn, worker incomes rise and consumer spending increases, which leads to additional business sales and a further need to increase employment, wages and capital expenditures. A virtuous economic cycle unfolds. This virtuous cycle is beginning to unfold in America.
What are the potential obstacles to this sunny American economic outlook?
- Economic weakness abroad means foreign consumers may buy fewer American goods and services.
- A strengthening U.S. dollar may hurt the earnings of U.S.-based multinational companies as foreign sales, denominated in weaker currencies, are translated back into U.S. dollars.
- Ever-present geopolitical risks (Ukraine, Middle East) cyberspying or social unrest (Greece, Hong Kong) could squelch U.S. consumer enthusiasm.
- Lastly, the Federal Reserve will one day choose to raise the Fed funds rate, which will be done only at a time of economic strength but may induce a negative financial market reaction, given that the Fed has adopted and implemented an unprecedented array of monetary policies over the past six years.
For now, though, U.S. CEOs are looking as brightly upon the American economic landscape as they have since the financial crisis began to engulf the country almost eight years ago.
Note on the YPO Global Pulse survey
The index is an economic indicator of executives' perspectives on the current and forward-looking business climate. It aggregated questions answered by more than 1,000 U.S. CEOs during the first two weeks of January regarding the pace of their companies' sales, hiring plans and capital expenditures, both in the most recent quarter and prospectively over the next year.
CNBC and YPO (Young Presidents' Organization) have formed an exclusive editorial partnership consisting of regional Chief Executive Networks in the Americas, EMEA and Asia-Pacific. These Chief Executive Networks are made up of a sample of YPO's unrivaled global network of 20,000 top executives from 120 countries who are on the front lines of the economy. The opinions of Chief Executive Network members are solely their own and do not reflect the opinions of YPO as a whole or CNBC.