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Are America’s optimistic CEOs getting a little carried away?

The Business Roundtable’s CEO outlook index hit its highest level on record in the first quarter, the trade group said Wednesday. The 9-year-old index, measuring expected sales, capital spending and hiring trends, hit 113 – a full 7% above than the previous high water mark.

You would feel confident too

A survey of 142 chief executives showed 92% expect sales to rise in the next six months, and 52% expect to hire workers in the United States. They expect the U.S. economy to expand at a 2.9% clip this year, up from a previous 2.5%.

Execs “see momentum in the economy over the next six months, with increased demand fueling greater investment and job creation,” said the group’s leader, Verizon (VZ) chief Ivan Seidenberg.

Of course, ”increased momentum” is not saying much, as lukewarm as the economy has been. But that CEOs should be highly confident now is no surprise. While U.S. wages have been flat for a decade, CEO pay continues to soar. And as weak as this recovery has been, many of the gains have accrued to big companies. Corporate profits are at a record (see chart, above), for instance.

At the same time, consumers are feeling markedly less confident, as a result of rising food and energy prices and the scarcity of good jobs. Consider the 40-point gap between the CEOs’ sales and hiring expectations.

The disparity between CEO and consumer confidence may or may not show that big U.S. companies are decoupling from Main Street. But here is a good sign the CEOs are decoupling from reality: not one executive surveyed in the latest round expects his or her company’s sales to fall in the next six months.

Even in the bubbly feel-good days of 2004-2007, every survey had at least one or two execs who admitted to lower sales ahead. But not this time. Score one for irrational exuberance in the catbird seat.

Also on Fortune.com:

• China warns of dollar trap
• Goldman getting top heavy?
• Why house prices will keep falling

Follow me on Twitter @ColinCBarr.

Filed under: Street Sweep

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The dollar can’t catch a break lately.

A top Chinese economist warned that the world has fallen into a “dollar trap,” as U.S. trading partners lack an alternative to the greenback and can’t prevent the Federal Reserve from printing more money.

Not fast enough for some

The arrangement means big holders of dollars – such as China, which holds some $3 trillion of foreign exchange reserves, mostly in dollars – must sit idly by and watch as the value of their holdings erode. They can’t lightly diversify out of dollars at the risk of accelerating the erosion.

The setup “lacks both stability and fairness,” wrote Xu Hongcai, an economist at the China Center for International Economic Exchanges.

He made the remarks in a paper published ahead of Thursday’s meeting of G-20 finance ministers in Nanjing. They will discuss what might replace the current dollar-centric system – a subject that has vexed economists and policymakers for years and has grown more pressing with the rise of China.

The meeting comes at a time when the dollar index is near its recent lows, thanks to the stumbles of the U.S. economy and the expansive monetary policy of the Fed. The dollar is down over the past year against the yen in spite of a massive disaster in Japan, and has failed to appreciate against the euro even as the Continent stumbles toward another spring of costly, politically divisive bailouts.

Xu, for his part, suggests moving toward a system of multiple reserve currencies overseen in part by the likes of the International Monetary Fund. He says the IMF could issue alerts that would prompt countries to intervene to hold the value of their currencies steady. Reuters notes that the proposal isn’t likely to pass muster with Westerners who favor the free-floating system that has been in place for decades.

There is no easy answer to a problem that has built up over decades, of course. But a report in the Wall Street Journal says the session promises to be even less of a free-flowing exchange of ideas than usual. Chinese officials are so sensitive on the subject of the weakening dollar and their tight control of their own currency, the yuan, that they have urged participants not to discuss the exchange rate issue that has been so heatedly debated on both sides of the Pacific.

But as appealing as that may sound, giving this problem the silent treatment is not going to make it go away.

Also on Fortune.com:

• Why it’s time to buy China
• Don’t bury the dollar just yet
• China passes $1 trillion in Treasury bonds

Follow me on Twitter @ColinCBarr.

Filed under: Street Sweep

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