Corporate financial professionals have increased their bullishness about the economy and for their individual companies over the past year, according to a survey released today by Strategic Treasurer and TD Bank, America's Most Convenient Bank®. Bank professionals, who were also polled in the survey, are even more optimistic but indicate less appetite for acquisitions than corporations.

In the United States, survey respondents stated the East Coast offers the largest opportunities, trailed by the Central and Western regions. Among reported growth expectations:

• 67 percent of corporations expect the gross domestic product (GDP) of their headquarters (HQ) country to expand during the next year and 73 percent anticipate an increase in their company’s sales/revenue during the same time period.
• 77 percent of financial institutions believe the GDP of their HQ country will grow, while 92 percent project that their institution’s revenue will increase over the next 12 months.

Tax reform, which went from being a possibility to a reality in late 2017, contributes to this positive outlook. Forty-two percent of businesses believe tax reform presents a significant economic benefit, and 28 percent of corporations with cash abroad plan to repatriate income back into the U.S. An even larger number of banks (58 percent) reported corporate tax reform will positively impact business, with 37 percent stating it will directly benefit company financial performance. Along with cash repatriation, companies report plans to use their newly-freed capital to make investments in the U.S.

When considering overall spending plans, corporations anticipate allocating excess cash (from all sources) for:

• Capital expenditures (43 percent), including IT upgrades and plant and equipment
• Debt repayment (33 percent)
• Holding for future investments (28 percent).

"The Tax Cuts and Jobs Act implementation could cause businesses to have extra capital to deploy, but it is even more encouraging that organizations expect to have cash on hand through normal course of business in the coming year," said Tom Gregory, Manager of Treasury Management Sales, TD Bank. "Together, these factors mean that companies could invest more funds, hire employees and generally spend on both their businesses and communities."

“To be clear, the highly optimistic economic sentiment represents both an opportunity and risk for companies," said Craig Jeffrey, CEO of Strategic Treasurer. "The opportunity these strong tail winds provide to build for growth must be calibrated carefully with the risk of inadequate positioning for the inevitable down-cycles.”

Even with this rosy view, businesses and banks did report several operational concerns. The no. 1 concern for both companies and financial institutions is increasing cyber fraud, followed by the cost of compliance, gridlock in Congress and healthcare reform.

The 2017-2018 Treasury Perspectives Survey was underwritten by TD Bank and conducted by Strategic Treasurer.  There were 336 respondents including corporate treasurers, treasury professionals and corporate bankers from around the globe (primarily from North America and Europe).

A copy of the survey data, an infographic and registration for a webinar about the full results is available here.