CEO Confidence Low but Holds Steady

July 16, 2008

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Household Income

The Conference Board Measure of CEO Confidence, which had declined in the first quarter of 2008, inched up to 39 in the second quarter, up slightly from 38 in the first quarter (a reading of more than 50 points reflects more positive than negative responses).

The last time the Measure fell below 38 was in the final quarter of 2000, when it was at 31, the Conference Board said.

“CEOs continue to rate current economic conditions as unfavorable, and their short-term expectations suggest this slow growth environment will exist for the remainder of the year,” said Lynn Franco, Director of The Conference Board Consumer Research Center.

CEOs’ assessment of current economic conditions barely registered an improvement, with less than 7% stating economic conditions had improved, compared with 3% last quarter. In assessing their own industries, business leaders were more pessimistic. Approximately 9% claim conditions are better, down from 14% in the first quarter.

Looking ahead six months, the outlook was mixed but generally pessimistic:

  • Some 24% of business leaders expect economic conditions to improve in the next six months, up from approximately 20% last quarter.
  • Expectations for their own industries, however, did not improve: Only 20% of CEOs anticipate an improvement in the months ahead, down from 23% last quarter.

On the issue of profit expectations over the next 12 months, 60% of executives anticipate increases. Executives engaged in the durable goods industry are the most optimistic, with 73% expecting profits to increase. Executives in the non-durable goods industry are second, with 56% anticipating a rise in profits.

Among the CEOs who expect profits to increase, 49% say they believe market/demand growth will drive profits up, while 23% cite price increases as the main source of improvement. Only 18% cite cost reductions as a driver of growth, and the remaining 11% cite technology.

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