M&A activity in the U.S. got off to a roaring start this year, with $35.7 billion in deals being announced in just the first nine days of the year. But the pipeline has slowed considerably since then.
Richard Peterson, senior director at S&P Global Market Intelligence, said nearly $360 billion in U.S. mergers and acquisitions have been announced for 2017, representing a more than 10 percent increase from the same period last year. However, that puts total M&A activity for the year on track for about $1.2 trillion, below 2016's roughly $1.7 trillion.
"Unless we get a couple of mega-deals announced, [M&A activity] will be down this year," he said.
The slowdown in the M&A market coincides with growing uncertainty around President Donald Trump and his administration's ability to move forward with some key policy initiatives, including tax reform and infrastructure spending.
Trump completes his first 100 days in office on Saturday without so much as laying out what some of these policy initiatives might look like. The president is also staring down a possible government shutdown. Government funding will end Friday unless Congress can agree on at least a temporary funding resolution.
U.S. stocks have been on a tear this year, bolstered by the excitement around the Trump administration's agenda. The S&P 500 is up about 6 percent in 2017.
EY's report also cited an improving U.S. economic outlook for executives' eagerness to strike deals.
But economic data have been mixed lately. Weekly jobless claims remain near their lowest levels since the 1970s, but the U.S. economy overall grew at an annualized rate of just 1.9 percent in the fourth quarter.
"We're only getting a whiff of growth," said Randy Warren, chief investment officer at Warren Financial.
Estimates for first-quarter 2017 GDP are also lackluster. The U.S. economy is expected to show a growth of just 0.5 percent for the last quarter, according to the Atlanta Federal Reserve's GDPNow tool.