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Saturday, Feb 22, 2025

Why Corporate America is jumping for joy while millions of workers remain jobless

Why Corporate America is jumping for joy while millions of workers remain jobless

America's CEOs are the most confident they have been in 17 years, as company leaders expect fewer layoffs and further improvements in the business environment, according to a recent survey from the Conference Board, a non-profit think tank.

But this sentiment doesn't align with the experience of millions of Americans who are still unemployed and need government aid to make ends meet as a result of the pandemic.

The disconnect is yet more proof of the k-shaped recovery, in which some Americans are experiencing major improvements while others are still suffering.

For example, a recent consumer sentiment survey from the University of Michigan showed that households making less than $75,000 per year felt especially pessimistic about their financial futures as of February.

Meanwhile, CEO confidence stood at 73 points in the first quarter of the year, marking its highest level since the same period in 2004, according to the Conference Board.

What makes business leaders so optimistic while many workers feel otherwise? CEOs think the outlook for wages has improved and the potential for layoffs is lower. Only 12% of surveyed CEOs said they expect a workforce reduction over the next 12 months, down from a hefty 34% in the fourth quarter survey.

Also, 82% of CEOs expect the economy to improve over the next six months, a jump from 63%.

"With the vaccine rollout underway in major economies, CEOs entered 2021 historically upbeat," said Dana Peterson, chief economist at the Conference Board.

On top of that, the stock market is near record highs, with the Dow (INDU) notching a new all-time high Wednesday and company valuations soaring. The strength in the market is due to hope for more government stimulus to bring the economy back to life, as well as the rollout of vaccines across the country.

Goldman Sachs (GS) predicts US gross domestic product — the broadest measure of economic activity — will grow this year at the fastest pace since 1989.

Meanwhile, the Federal Reserve's interest rates remain near zero, so it's cheaper for companies to borrow or refinance their debts.

The CEOs may be onto something with their optimism. But for millions of Americas the stock market's highs make little difference in their lives.

More than 18 million people received benefits under the government's various programs in the last week of January, the Labor Department reported Thursday.

Economists fear the effects of long-term unemployment on the economy; the longer workers are out of a job, the less likely they are to return to work at all.

Meanwhile, many of those who have returned to work have seen their hours or wages cut, or perhaps both, as the pandemic economy exacerbates America's inequities.

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