US corporate leaders are increasingly upbeat about growth in the world’s largest economy, as lawmakers prepare to enact deep tax cuts, the Business Roundtable said on Tuesday.
The group’s index of chief executives’ sales projections, spending and hiring plans over the next six months hit its highest level in nearly six years.
The Economic Outlook Index rose to 96.8 points for the fourth quarter, up from 94.5 in the third and the highest since early 2012.
Hiring plans dipped slightly, but remained high.
Chief executives project GDP growth of 2.5 percent for the year, in line with prior years, but below the White House’s target of 3 percent.
Business Roundtable chairman Jamie Dimon, who is chief executive of JPMorgan Chase & Co, said business leaders’ high hopes were pinned on Washington’s delivery of a pro-growth agenda.
“To continue this momentum, it is critical that we enact pro-growth tax reform that will level the playing field for US business to be globally competitive,” Dimon said in a statement.
After some last-minute snags, Republican lawmakers are inching toward the finish line in enacting the first sweeping tax code overhaul in three decades — despite official projections it could add US$1 trillion to the budget deficit over 10 years and widespread criticism that the benefits go primarily to the rich.
The US House of Representatives and Senate have to reconcile their different versions of the bill, which would cut corporate taxes to 20 percent from 35 percent, while also cutting taxes on partnerships whose profits go directly to their owners.
Supporters say this brings the US tax regime in line with those of other developed nations — and would encourage multinational corporations to repatriate their earnings — but effective corporate tax rates are already significantly below 35 percent.
Economists at investment bank Goldman Sachs Group Inc estimated this week that the US Senate bill could boost growth by 0.3 percentage points next year and in 2019, but could be minimal or even negative from 2020 and beyond.
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