The first quarter of 2017 has seen more uncertainty in business, politics, and economic factors globally than at the same time last year. According to the Conference Board, a worldwide independent business membership and research association, the Global Economic Policy Uncertainty Index is at its highest point in the last 20 years. Typically, businesses consider uncertainty a reason to withhold investment, which slows economic growth. Reasons for uncertainty include the United Kingdom’s pending exit from the European Union (“Brexit”), as well as the evolving policies of the Trump administration. Additionally, world leaders list the risk of global recession, cyber security, and failure to attract and retain top talent among the top five drivers of uncertainty. While uncertainty factors abound, the first quarter of 2017 has seen a boost in business confidence in the U.S. thanks to the prospect of domestic infrastructure spending and less regulation.
For the remainder of the year, the Conference Board projects a 2.5 percent growth in the United States. The impact of increased spending and reduced regulation may be delayed due to the time it takes to develop the financing for infrastructure projects. Regulation changes require approval from Congress and could also take time. Tax cuts represent the best chance to make a modest impact on economic growth by the end of the year.