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CEO Confidence Index December 2004

Texas, Nevada, Florida seen as most attractive states for business California, New York, Massachusetts seen as least attractive

CEO Confidence rose significantly this month in the wake of George W. Bush’s reelection to a second term. Back in August, 2004 (see http://chiefexecutive.net/ceoindex/0804/default.asp), when Chief Executive Group polled CEOs on which presidential candidate would deal with 9 key political issues most effectively, CEOs spoke out resoundingly in favor of the president elect. As a result, the leading economic indicator jumped 9.5 points this month (6 percent) to 171.8, the first month CEOs were polled after the election. This is the first time the index has been above 170 since July 2004.

The year-long trend of current confidence leading future confidence continued this month as well, with the gap actually widening. Current Confidence jumped 12.3 points to 189.6 while Future Confidence only jumped 7.7 points to 159.7. Many issues important to CEOs like tort reform, the destabilization of the Middle East, and healthcare still remain undecided, and those in America’s corner offices still remain cautious but confident as a result.

Yet, strong numbers this month in all component indices left CEOs confident that Mr. Bush can create a favorable business climate, according to the 458 surveyed this month. The Business Condition Index rose strongly this month, too, by 11.7 points to 194.0. The Employment Confidence Index has proven an excellent indicator what of U.S. employment levels will be in the quarter year ahead, and this month the Employment Confidence Index rose solidly by 12.6 points to 184.8. “The executive perception of the political climate seems to explain much of the jump in Confidence this month,” said William J. Holstein, Editor in Chief of Chief Executive Magazine. “The assurance of an White House favorable to business will allow CEOs to forge ahead in the coming months.”

Yet, a business-friendly Commander-in-Chief does not tell the whole story. Chief Executive Group conducted additional polling on executives to see which states they perceived as least and most attractive for business. Taking into consideration factors like taxation, regulation, labor laws, litigation, education, and many others, the verdict from CEOs was that, ranked in order, California, New York, Massachusetts, Washington, D.C., and Hawaii were not very attractive from a business standpoint. “In the… unattractive states regulation runs amok,” said one executive who wishes to remain anonymous, “although the governator has made steps to switch this trend”. On the other hand, executives found, ranked in order, Texas, Nevada, Florida, Arizona, and North Carolina to be the states that were most attractive for them to do business in, although Nevada and Florida were tied for second according to the poll. In all, they had low costs, favorable business laws, and a strong, sustainable infrastructure. “Texas, Nevada, and Florida have created a welcoming business environment with low costs, low taxation, and relatively better regulation,” said Edward M. Kopko, CEO of Chief Executive Group. “Executives notice this and tend to gravitate towards states that have a good business environment. Simply put, some states, according to our polling, are viewed as being unfriendly towards business.”

The CEO Confidence Index normally is released on the third Tuesday of each month.  For additional information regarding the confidence of public- and private-company CEOs, details about regional CEO attitudes on employment, investment and business conditions, as well as confidence differences between service and non-service industry CEOs.

Chief Executive is a controlled circulation magazine that reaches 42,000 chief executive officers and their peers.  It is published 10 times a year and reaches a total readership of 170,000.  Chief Executive Group facilitates “Chief Executive of the Year,” a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers.  Fred Smith, Hank Greenberg, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award’s 17-year history.  Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers.   

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