Economist grow wary

Ever since Donald Trump’s election as president in November, there’s been a stream of surveys showing that business owners and top executives are feeling more confident about the economy and their business prospects than they have in years.

However, while the stock market has risen in what some call the “Trump bump,” there is also evidence that all these expressions of confidence are merely expressions and are not translating much into tangible actions.

According to The New York Times, a historically-relevant measure of business confidence, mergers and acquisitions activity, belies a greater level of nervousness about the economy than those surveys indicate. Mergers, especially big, mega-deal mergers, are down, according to the Times, with M&A activity sitting at its lowest level since 2013.

Teasing out why business leaders are behaving this way, though, is a difficult task. The Times quoted John Waldron, co-head of global investment banking at Goldman Sachs, saying corporate leaders are waiting for clarity on actions the Trump administration has said it would take. Uncertainty on taxes, infrastructure and deregulation could all be weighing on those decision-makers, Waldron told The Times.

The Times also cited the Business Roundtable’s chief executive confidence index (released last week), which jumped from below its historical average in the fourth quarter of last year to well above that average in the current quarter, indicating especially high confidence. USA Today’s report on the Roundtable’s release references some of the same challenges highlighted by the Times.

Specifically, USA Today quoted Jamie Dimon, CEO of JPMorgan Chase (NYSE: JPM) and the Roundtable’s chairman, saying, “We remain confident that Congress and the administration will coalesce around a plan for meaningful tax reform,” and Joshua Bolten, CEO of the Business Roundtable, was quoted as saying, “Talking to CEOs, I know the vast majority of them believe tax reform is not only possible but likely over the next year and they’re making their plans based on that.”

In other words, CEOs are well aware that “meaningful tax reform” isn’t yet a sure thing but they remain confident that it is coming, and so, it appears, they are expressing confidence in the economy in surveys, which is much easier to do than pulling the trigger on a merger or acquisition.

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