America’s corporate leaders are shrugging off a monthslong trade war, a protracted government shutdown and other looming economic threats, projecting that revenue growth in 2019 will be strong largely on the assumption that President Trump will reach a deal with China.
They seem to be increasingly isolated in that view.
In earnings calls and interviews, executives at some of the largest companies in the United States have played down what many economists and analysts see as possible obstacles to economic expansion both at home and abroad. In addition to the shutdown and the trade war, the challenges include recent signs of weakness in manufacturing data and slowing growth in China and Europe.
Business leaders are instead expressing confidence that the Trump administration and Chinese officials will strike a trade agreement before midnight on March 2, when tariffs on Chinese imports are set to more than double, and keep the economy humming.
“We think the trade talk is going to be winding down over the next two or three months, the government shutdown will be figured out,” Kelly King, the chief executive of BB&T Corporation, said last week while discussing the bank’s fourth-quarter earnings in a conference call with analysts.
Marianne Lake, JPMorgan Chase’s chief financial officer, was similarly upbeat in comments to reporters last week.
“Put aside the shutdown and China trade and all that,” Ms. Lake said. “The underlying statistics of the global economy are not bad.”
Jamie Dimon, the bank’s chief executive, said the same day that he remained confident that a trade agreement was near and that with the deadline looming “enough will be done to kind of get an extension and hopefully complete the deal.”
And Mr. Trump continues to project confidence that a trade deal is within reach, telling reporters on Wednesday that “we’re doing very well in our negotiation with China.”
“China very much wants to make a deal,” he said. “We’ll see what happens. I like where we are right now.”
Corporate leaders are eager to continue what has been a sustained run of growth, and historically high profits, since the financial crisis. Their optimism defies gloomier predictions from chief financial officers, nearly half of whom predicted in a Duke University survey last year that there would be a recession in 2019. Federal Reserve officials continue to forecast solid growth for the year, but they have signaled at least a temporary pause in interest rate increases as they wait to see if trade tensions and other headwinds slow down the economy.
Executives appear to be putting their faith in a president who has portrayed himself as a deal maker but who has yet to broker agreements to fund government operations, resolve the trade dispute with China or even win congressional approval for a new North American trade agreement. If their confidence is misplaced, companies could wind up confronting a steep drop in the financial markets and a contraction in business activity.
The economic impact of the shutdown is already being felt: On Tuesday, analysts blamed it for discouraging some Americans from buying homes in December, when existing home sales experienced their largest decline since 2015.
Even Mr. Trump’s normally bullish economic advisers have become slightly less sanguine.
In an interview on CNN on Wednesday, Kevin Hassett, who chairs the White House Council of Economic Advisers, warned that the shutdown, which is in its fifth week, could pull economic growth to zero for the first quarter if it lasts through March. Mr. Hassett, however, insists that the damage will be short-lived and that growth will bounce back once federal workers receive their back pay.
Larry Kudlow, director of the National Economic Council, said Tuesday that reaching a trade deal with China by the deadline would not be easy.
“I acknowledge the degree of difficulty,” Mr. Kudlow told reporters.
Not all corporate executives are playing down the warning signs. American companies like Apple and FedEx have already attributed lower revenue estimates partly to the trade war with China.
The shutdown and the trade war have helped to raise economic policy uncertainty in the United States and around the world, according to indexes compiled by the economists Steven J. Davis of the University of Chicago’s Booth School of Business, Nick Bloom of Stanford University and Scott Ross Baker of Northwestern University’s Kellogg School of Management.
In December, global uncertainty reached its highest level in more than 20 years of data, according to the professors’ indexes. One of the measures, a monthly gauge of uncertainty in the United States, rose to its highest level since 2013, the last time the government endured a prolonged shutdown. On Tuesday, another of the indexes, a daily-news-based measure of American uncertainty, reached its highest level since immediately after Britain shocked the world in 2016 by voting to leave the European Union.
A third index, of trade uncertainty, has climbed as a result of the administration’s tariffs on imports from China and other countries. Professor Davis has warned that the uncertainty has reached a point where it is deterring investment. In an interview, he said the effect was noticeable but not catastrophic — “It’s more like shooting off your little toe, as opposed to shooting off your whole foot” — and probably here to stay.
“The issues between the United States and China don’t lend themselves to an easy or early resolution,” he said. “So I expect that will continue for quite some time.”
The financial markets have repeatedly jumped in response to news reports suggesting the United States and China are making progress toward a deal, only to give back some gains when the good news goes unconfirmed. The latest example came at the end of last week with reports of two different possible solutions to the impasse that White House officials ultimately shot down.
Executives are mostly minimizing the prospect of the world’s two largest economies failing to reach agreement or that the shutdown could persist and materially dent business activity, much as they minimized the chance of a shutdown even happening right before it began.
At a banking conference on Dec. 4, Timothy J. Sloan, Wells Fargo’s chief executive, said he did not “see a lot to be concerned about” when asked about the outlook for the United States economy. Other chief executives made similar comments that week.
“I feel like we’re trying to talk ourselves into a slowdown,” Randall Stephenson, AT&T’s chief executive, said at a Dec. 6 event organized by the Business Roundtable in Washington. “There are clouds on the horizon,” he added, prompting Mr. Dimon, who was also onstage at the event, to say, “Which have always been there.”
Dennis Muilenburg, the chief executive of Boeing and another panel participant, added: “We can’t take this near-term volatility and let it distract us.”
Some analysts and investors, worried that executives may be overconfident, are warning against complacency.
“There’s an implicit assumption that the China trade deal will get worked out based on the commentary by the banks in fourth-quarter earnings,” said Mike Mayo, a bank analyst at Wells Fargo Securities. “An absence of that would not be good.”
The billionaire investor Seth A. Klarman stirred the World Economic Forum in Davos, Switzerland, this week with a letter to clients that raised concerns about the health of the global economy, including rising levels of public debt in wealthy countries and America’s diminishing leadership role in the world.
“It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Mr. Klarman wrote.
Jeffrey Sonnenfeld, a professor at the Yale School of Management, said that some of the executives’ public calm was an act. In private, he said, many of them are very worried, but they are scared to speak their minds and publicly criticize Mr. Trump, potentially provoking him into retaliating against their companies.
“Everyone is afraid of a vindictive response to their companies as individuals, so they’ll play ‘no big deal here’ in public,” he said.
Professor Sonnenfeld said he had surveyed business leaders, including some Fortune 500 chief executives, who attended a leadership conference that Yale hosted last month. Around 80 responded to questions about the trade war, Mr. Trump’s interactions with other world leaders and the partisan battles in Washington. Their answers, he said, suggested they were more worried about the president’s erratic behavior than they had admitted publicly.
Most said the biggest threat to financial market strength was political instability in the United States.