Article written by:
Ed Bannen, CPA
“Yep, just as I expected, still beating.” With all the fake news on the internet these days, it’s hard to tell if we are heading toward feast or famine. A few weeks ago, I read a survey where private company leaders across America were interviewed on their expectations for 2017 after Q1’s report cards.
The high-points from the article:
- Leaders are more optimistic about US economy at the end of Q1 2017 than Q4 2016;
- However, only 15% of private companies expect double digit growth; down from 25% last quarter;
- 43% of leaders are worried about profitability at the end of Q1 2017 vs 34% at Q4 2016; and
- Spending and hiring sentiment are about the same; 27% planning new capital investments and 50% plan to hire additional personnel.
After reading those stats, I was getting a very mixed/unhelpful picture of private companies’ outlook. So I went to the source, spoke with some of my private clients and shared this article. Those clients were in the construction, manufacturing and distribution industries.
Most clients are indeed optimistic about the US economy primarily due to the change in the White House. When asked what specific policy changes have caused this attitude shift, the responses typically involved the future expected change in policies, to a more favorable attitude toward business and business owners.
When asked about growth, most clients have seen better than expected growth; beating budgets in each quarter of 2017. Next I asked where this was putting them profitability-wise. Most companies are still operating “lean, mean and efficient machines”, the result of the hard times from 2008-2013. However, the optimism about the economy and the growth sense during 2016 and mid-way through 2017, has pushed these private companies back into the expansion mode. Not reckless expansion; but calculated, controlled growth. Most companies are still stockpiling cash for comfortable reserve and slowly releasing that cash back into the market for additional investments.
Moral of the story….
The numbers can be confusing, but the general outlook for private companies is on the rise and positive. There are still many unknowns for the remaining two quarters of 2017, but for now many private companies are cashing in on the “good times” and recovering some of the losses from the “dark times.”