DURHAM – Even as tariffs become more common and trade war talk intensifies, business executives remain excited about the economy with their attitudes at near-record levels, says Duke University’s quarterly survey from its Fuqua Business School.
The Optimism Index in the CFO survey declined this quarter, but only by a point, to 70 on a scale of 100 from the record high of 71 posted in the previous quarter.
“We did not have a decline really,” says John Graham, a finance professor at Fuqua and director of the survey. “From 71 to 70. I’d think of that as ‘held steady at near record high.'”
Its findings reflect those of the recently released survey from the American Institute of CPAs. Both focus on expectations for future trends of the economy. A survey of small businesses across the US released on Tuesday found business owner optimism to be also at record-high levels.
But as in the other surveys, responses from executives included continuing concerns about trade wars as well as finding qualified workers. Job openings hit a record high of 6.94 million, according to new US government data released Tuesday.
Execs want more immigrant workers
In fact, with more job openings than people available to fill them – or qualified for many jobs – executives are concerned that they will continue to have trouble filling positions. Many executives in the survey said they want the US government to permit more high-tech workers from overseas be hired through the H-1B Visa program and that more immigrants be granted “green cards” for work permits.
“More than 82 percent of U.S. companies believe the government should routinely grant H-1B work visas to foreign science and technology undergraduate students studying in the US,” Duke points out. “And 77 percent support the routine award of green cards to foreign graduate students who are pursuing advanced science and technology degrees.”
Wage pressure = inflation
Graham says executives are justified in their concerns.
“Risk is that the firm can’t not produce at capacity,” Graham tells WRAL TechWire. “In extreme cases, quality concerns could occur.”
He also points out employers will have to pay more to keep or hire workers – and that means price pressure.
Employee churn is increasing, the survey notes. And federal data confirms that, noting 2.7 percent of private-sector employees are jumping to new jobs in what is known as the “quits rate.” That’s just off the record of 2.9 percent set in 2001, according to MarketWatch.
“If there is a shortage of employees, wages will eventually increase, which could start to push up inflation,” Graham warns.
The Federal Reserve is already hiking interest rates this year, driving up the cost of corporate borrowing as well as consumer costs such as for mortgages.
“The tight labor market continues to put upward pressure on wages,” said Chris Schmidt, senior editor at CFO Research, which partners with Duke on the survey. “Wage inflation is now a top five concern of U.S. CFOs.”
Unemployment is under 4 percent nationally while Gross Domestic Product growth is topping 3 percent, both indicators of a strong economy. But executives also are concerned about tariffs with President Donald Trump planning to increase them on more products from China.
Companies facing tariffs plan to reduce their own spending, according to the survey.
Unlike in the US, optimism fell among executives overseas who responded to the survey.