Despite a lingering employment crisis and an unprecedented slide in growth, corporate executives remain generally upbeat on the chances for recovery and are going ahead with expansion plans, according to a business survey released Friday.
Three-quarters of top-level corporate officers said in TMF Group's survey they are at least "somewhat confident" about the economy even in the face of the numerous challenges that have arisen during the coronavirus pandemic.
Of the 300 who took part in the April 17-23 survey, 67% said they expect the economy to recover within seven months to a year and close to a quarter still expect to see a V-shaped recovery — a very strong rebound.
Those sentiments came during a month when nonfarm payrolls fell by 20.5 million and the unemployment rate rose to 14.7%, the highest since the Great Depression. Moreover, most economists see GDP falling 40% or more in the second quarter.
"In March, where was a lot less clarity and fear and uncertainty, I'm not sure these numbers would have come back the way they did," said Larry Harding, head of North America for TMF, a global business consultancy.
Harding attributes much of the decline in fear to the aggressive policy response.
Congress passed the $2.2 trillion CARES Act to help displaced workers and impacted businesses, while the Federal Reserve slashed interest rates and instituted nearly a dozen lending and liquidity programs aimed at market functioning and economic well-being.
"Lessons learned in the '08 financial crisis were applied here more efficiently and I think that tended to calm down a lot of the concerns," he said. "It's nice to see some of the lessons applied quickly."
Indeed, 61% of those surveyed said the support to workers and businesses had at least a "somewhat positive" impact.
Harding said the high level of confidence is probably playing a role in the stock market's powerful performance in the face of otherwise bleak economic signals.
"There's definitely a connection," he said. "In some ways, they're reinforcing each other. Business leaders feel more optimistic than they would have otherwise because the market didn't crater."
While more than half the businesses said they expect normal operations to resume within six months, just 42% said they will bounce back financially during the same period.
Still, 36% plan to accelerate plans for international expansion, while 32% are looking to grow domestically.
As companies adjust to the new landscape, they also indicated that they are changing supply chains, which were impacted severely as the disease spread through Asia and Europe. That was a process that had already begun during the U.S.-China tariff war and likely will continue.
"The one-two punch of what the future may look like is putting a ton of emphasis on supply chain flexibility. That's probably a good, prudent thing," Harding said. "A lot of the trends that will certainly accelerate and are not going away coming out of the pandemic probably existed and were moving in that direction beforehand, but this is a jump-start for a handful of things like that for sure."
Risks that businesses cited included consumer confidence, trade uncertainties and regulation.
Though health professionals have expressed caution over a second wave of coronavirus infections, business leaders don't seem as worried.
"I don't think business leaders are assuming a second wave isn't going to happen," Harding said. "I think they're planning and providing for it and assuming it will be controlled, vs. what was uncontrolled the first time."