Capital Markets: Observations & Insights

Confidence Is Critical for Spending Business Spending Boost

• CEO confidence tends to lead business spending by 6-12 months • Strengthening business confidence indicates higher corporate spending

CEO Confidence

Business Spending

90

30%

Estimated

80

20%

70

Y-ear-over-Year Change

Increase in CEO confidence bodes well for business spending

60

10%

50

0%

40

30

-10%

Confidence Index

20

-20%

10

-30%

0

1981

1982

1983

1984

1986

1987

1988

1989

1991

1992

1993

1994

1996

1997

1998

1999

2001

2002

2003

2004

2006

2007

2008

2009

2011

2012

2013

2014

2016

2017

2018

Source: FactSet, U.S. Conference Board and U.S. Bureau of Economic Analysis as of 9/30/17. Business spending is U.S. private fixed nonresidential equipment and intellectual property expenditures. Estimate based on regression of confidence and business spending.

Page 5