Business Execs Reach Highest Economic Optimism Level in 12 Years

The American Institute of CPAs reports that business executives are reporting their highest level of optimism about the U.S. economy since 2004. The Institute's first-quarter poll, consisting of chief executives officers, controllers, chief financial officers and certified public accountants, shows U.S. economy outlook over the next 12-month period is up to 69% from the previous quarter.

Optimism levels are at their highest point since 2004 when optimism levels were 71%.

The first year the survey took place was 2004. Optimism levels were as low as 28% in 2016 before rising to 68% in 2015. Optimism for the executives' own companies is on the rise. Nearly 66% of participants expect profit and revenue to increase in the next 12 months. The figure is up from 61% in the final quarter of 2016 and up from 44% a year prior.

The first-quarter survey was conducted over a two week span in February and includes 930 responses from CPAs in leadership positions.

Participants note economic outlook optimism following the Presidential election. Top concerns of participants is labor market tightness. The availability of skilled personnel is one of the top concerns for business leaders. The poll indicates that 51% of those polled plan to spend more on training and staff development.

Tax cuts will result in capital expenses and not hiring, according to those polled.

A staggering 81% of respondents expect the corporate federal tax rate to drop significantly under the Trump Administration. The majority of respondents do not believe the tax cuts will take place until 2018.

Nearly half, 43%, state that tax cuts will have no impact on their business. Another 33% state that tax cuts will provide a slight or moderate impact on their businesses.

Economists revised the US growth forecast in January as Donald Trump was sworn into presidency. Trump's promise to lower the corporate tax rate is expected to give a boost to the economy in 2017.

Corporations and economists are largely optimistic that the tax cuts, ranging to $2.5 trillion over the next decade, will help spur economic growth in the country. Growth in the short-term is expected following the tax cuts.

Economic growth in the United States was 1.6% in 2016, with the revised figures for 2017 showing 2% economic growth.

Trump's tax plan is in line with the Republican tax plan from July, suggesting that the tax plan will pass through quickly. Corporate tax rates will be cut by up to 20% down to lows of 15%. Corporate profits for 2017 are expected to rise 4.5% in 2017 as a result of the lower tax rate.

Individual income taxes will be reduced, too. The tax rate for the wealthy will fall from 39.6% to 33% under the proposed law. A lower tax rate will allow consumers to have a higher disposable income, allowing for more money to be spent in stores.

Economists also predict that an additional 200,000 autos will be sold in the country if Trump's tax plan goes into effect this year.

Lower tax rates for corporations and individuals is expected to have an immediate impact on economic growth in the short-term.