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CEOs are optimistic about the economy

June 25, 2021, 10:42 AM UTC

Good morning.

We’ve got a new poll of CEOs out this morning, conducted in collaboration with Deloitte. The big takeaway is surprising optimism about the economy. Some details:

—53% of the CEOs believe the business effects of the pandemic “will largely be over by the end of 2021.”
—77% of CEOs expect their organizations growth to be “very strong” or “strong” over the next 12 months.
—82% expect to increase spending on technology modernization.
—Asked in an open-ended question to name the biggest challenge they face, the CEOs mentioned “talent” more than anything else.
—Cybersecurity was also top of mind, with 86% saying it is “highly” or “moderately” relevant to their agenda. Cryptocurrency ranked at the bottom, with only 16% ranking it “highly” or “moderately” relevant. 
—Three-quarters of CEOs believe corporate taxes are likely to rise, but concern over tax issues (only 60% said it was “highly” or “moderately” relevant) was significantly below concern over social issues (73%), and only modestly higher than concern over climate (56%).

The results were rolled out earlier this week at a special session of the Fortune CEO Initiative, and comments from attendees added some useful caution. Summarizing the poll results, Deloitte U.S. CEO Joe Ucuzoglu said the following:

“There is tremendous optimism. It does seem to be grounded in economic fundamentals, strong growth, tremendous pent-up consumer demand. I’ve had, in conversations with client CEOs over the past couple of weeks, comparisons made to the Roaring 20s, comparisons made to the period coming out of World War II.

“What’s the potential curveball? If I had to pick one, it is absolutely this unprecedented experiment in fiscal and monetary policy, and the visible signs of price escalation and wage escalation. We’ve gotten some subtle assurances that it’s all transitory. But what if it is not?”

Dan Knotts, CEO of RR Donnelly, amplified the concern about supply chain problems and talent shortages:

“We service just about every industry that is out there. The recovery is definitely happening across most. But the biggest concern we are hearing back from our 30,000 clients is the supply chain challenges and labor challenges.”

Barbara Humpton, CEO of Siemens USA, expressed the supply chain disruption with a relatable metaphor:

“What we are going through feels like when you are out on the beltway around one of our major cities, and somebody taps on the brakes, and there’s a pileup.”

Occidental CEO Vicki Hollub confirmed the sharp increase in concern over climate issues:

“We have been working on our low carbon strategy now for a number of years, and for a long time the only people who would talk to us about it were the European investors. Now we have seen a shift. It started happening about a year ago. If you go back and listen to our last couple of earnings calls, about half the questions have been about low carbon, and how to get there.”

And both Ucuzoglu and Laurel Strategies CEO Alan Fleischmann emphasized concern over cybersecurity. Here’s Fleischmann:

“I think it is the biggest issue CEOs think about, if not talk about. It’s getting worse not better.”

And here’s Ucuzoglu:

“There is a growing realization that this is actually perhaps the greatest threat the country faces… We are at the early stages of trying to stand up a massive partnership between private industry and government in tackling what really is a shared objective in the interest of the country.”

More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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