Oddly... notwithstanding what would appear to be the largest non-war time spending by the US Government... most CFO's are not expecting much of an impact on their business investment spending. For sure the threat of increased corporate taxes will have an impact on capital allocation for many CFO strategists. It's still early in the investment season and bellwether capital expenditures do take time to develop, even if it is for replacement expenditures. A frothy M&A market, an impressive amount of available liquidity, and still low interest rates are all part of the dynamics at play. As we head into the 2nd quarter, let's keep watch on the cash meter. Safety first - sit on your cash stacks and place bets carefully.
While the $1.9 trillion American Rescue Plan could eventually convince CFOs to increase capacity, they seem to be waiting for now. A majority of the 961 members of the Richmond Fed CFO Survey panel said the law’s fiscal measures would have “little to no impact” across all areas of their business activity — sales revenue, employment, prices, or wages. A smaller share of firms did expect increased business activity resulting from the stimulus, but they indicated the increase would be “modest to moderate.”