CEO Confidence Index December 2005
December 20 2005 by Chief Executive
Despite Oil, Interest Rates, Holiday Season Brings Optimism CEO Economy Predictions, “All I Want For Christmas Lists” Arrive
Continuing November’s rise, the Chief Executive CEO Confidence Index rose by 14.5 points this month to 173, according to 498 top executives surveyed. Most CEOs are very confident about the current economic climate, even withstanding current issues of energy prices, interest rates, and the war in Iraq. Said David A. Wilson of the Graduate Management Admission Council, “Let’s reclaim our optimism, for it is this optimism that defines America and Americans.”
Of the five sub-indices also calculated, Chief Executive’s Business Conditions Index was the strongest performing, rising by 20.8 (10.5%) points to 198.7. Additionally, the CEO Current Confidence Index also rose strongly, by 20 points, to 207.2. CEOs sense strength in the current economy: of the 498 executives surveyed, 58% feel domestic business conditions are currently “good,” compared with 44% of CEOs who felt similarly last month.
CEOs also remain bullish about the job market; this month the Employment Confidence Index rose by 15.7 points to 185.8. 51% of CEOs surveyed expect employment to increase over the next quarter, and an additional 37% expect that employment will at least stay the same. Exemplifying strong hiring optimism, one CEO said, “our firm is budgeting more than 600 hires in 2006. We currently have 2000 employees.”
Still, CEOs are aware that not all is well in every aspect of the economy. They are concerned that interest rates are bound to rise in the coming months and that energy prices remain unstable from the war on terrorism. Mirroring their concern was the Investment Conditions Index, the worst performing index this month, which rose by only 8.1 points. One respondent noted, “the pressure on China to increase the value of its currency will result in inflation for the U.S. and an increase in long term interest rates.” One CEO simply said, “Iraq is the wild-card in all my comments on the economy.”
With the end of 2005 upon us, Chief Executive conducted additional polling this month to determine the predictions of CEOs regarding interest rates, the Dow Jones Index, and the price of oil. CEOs were asked to give their predictions for December 31st, 2006. The surest thing for CEOs is the rise of interest rates: on the average, CEOs predicted interest rates will be at 4.88 in a year (up 22% from their current rate of 4% at the time of polling), and a few CEOs even think they might double. They also predicted the Dow Jones will be at 10,430.5, a 5% rise over the next year. And finally, according to those surveyed, the price of a barrel of oil will be $56.94, actually 3% lower than it is today.
Chief Executive Magazine also decided to complement CEO predictions with a holiday-friendly “All I want for Christmas€¦” lists. Taking all the CEOs’ wishes together, several wishes were commonly at the top of their respective lists. Among those things greatly wished for this holiday season: an end to the Iraq War, the death of Sarbanes Oxley regulation, an iPod Video, a very long, perhaps permanent, vacation for governmental activists like Eliot Spitzer, and a return of fiscal prudence (balanced budget, deficit reduction) by the government and the administration. According to CEOs, however, the most wished for holiday gift was simple: Peace.
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 has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 170,000, and is published 10 times a year. 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. George David, 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 20-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. Visit www.chiefexecutive.net for more information.
Chief Executive’s CEO Top 10 Wish List:
10. Golf balls that go straight
9. Capture of Bin Laden
8. Deficit Reduction & Spending vetoes by President Bush
7. Quiet time with the family
6. iPod Video
5. End of Iraq War
4. Death of Sarbanes Oxley
3. Plasma screen for the bathroom
2. Less Eliot Spitzer
As the new year and holiday approach we are asking for you to make your predictions for the following for December 31st, 2006.