CEO Confidence Index December 2006

Holiday Season Brings More Optimism For the Future CEOs Share Their Wish Lists, Predictions for Oil, Dow, & Interest Rates in 2007

December 18 2006 by Chief Executive


 Click the image to see Ed Kopko on CNBC

With the advent of the 2006 holiday season the Chief Executive CEO Confidence Index rose 6.0 points according to 212 top executives polled. The leading economic indicator currently sits at 165.2. It has risen every month since September. The five component indices that make up the overall CEO Confidence were mixed this month, with 2 falling and 3 rising. Richard Gerson, CEO of Gerson Goodson, Inc. said, “Confidence will remain about where it is right now until oil prices and interest rates drop. Then, we will see a rise in consumer confidence and an expansion and growth in the business sector.”

The gains this month were driven mainly by the Future Confidence Index, which rose by 11.2 points to 136.1, and the Investment Confidence Index, which rose by 9.5 points to 144.2. While the Future Confidence Index rose strongly, the Current Confidence Index fell slightly, by 1.8 points, to 208.3. Last month, the gap sharply jumped to a historical high of 85.2 points, but the reversal this month reduced the current-future confidence gap by 13.0 points.  Said Bill Ferko, CFO of the Genlyte Group, “It feels like we are at the same economic [sic] point as we were in 1996 and the American economy is positioned for continued growth.”

Over 2/3 of CEOs (67.2%) polled expect the economy to grow over the next quarter while only 9% expect decline. This level of future optimism is the highest it has been since July of 2006. Some CEOs cited the holiday season as a cause for optimism. Jim Scatena, CEO of FloraCraft claimed, “When US consumers get out in the stores and shop, a lot of our economic problems go away.  Lower crude reduces heating costs and gasoline which gives them extra shopping cash.  That all spells ‘Merry Christmas’!”

Chief Executive Group also conducted additional polling this month to obtain CEOs predictions on the direction of the Dow Jones Industrial Average, Crude Oil prices, and interest rates over the next year. Last year at this time CEOs were asked to give the same predictions, thereby predicting current levels of the Dow, Oil, and interest rates. The predicted the Dow would rise by 5% when it actually rose by 14%. They predicted interest rates would rise from 4.00% to 4.88%, and they actually rose to 5.25%. Finally, they predicted oil would fall by $2 per barrel, but it actually rose by $4 per barrel. From their predictions collected this month, they predict the Dow to rise by about 350 points, interest rates to stay pretty much flat, and oil to rise by just under $1 per barrel from the time of polling (see table below for full results).
 
This month CEOs were also asked to divulge their holiday wish lists. Their wishes covered a wide range of topics: politics, business, and personal wishes were all listed. The most common wish by CEOs was regarding peace and the middle east: many CEOs wished for an end to the Iraq war, peace in the middle east, world peace, or some variant of this theme. In the business realm, CEOs first wished for cheap healthcare for their employees, followed by regulatory relief and new business prospects. Dave Panasci of DHP Consulting wished for “A more friendly business environment in New York State,” while another CEO wished to “Successfully move business out of San Francisco so we can be competitive with national competitors.” Finally CEOs listed their personal wishes as well. Above all, they hoped for time with their families and time for vacation, but they also listed some of this year’s hot gift items like HDTVs, Nintendo Wiis, and iPods.
 
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, visit our full report at
http://www.chiefexecutive.net/ceoindex.
 
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.  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.  A. G. Lafley, George David, Fred Smith, 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.

CEO Index, November 2006

Respondents: 212

 

 Dec-06

 Change from Prev Month

 Ceo Index

 165.2

 6.0

 Current Confidence Index

 208.3

 (1.8)

 Future Confidence Index

 136.1

 11.2

 Business Condition Index

 180.5

 9.2

 Invest Confidence Index

 144.2

 9.5

 Employment Confidence Index

 175.4

 (2.2)

 Chief Executive’s CEO Top 10 Wish List:
 10. Segway
 9. Vacation
 8. Nintendo Wii
 7. Reduced Air travel Complications and Delays
 6. New car (Bentleys, Aston Martins, Lexuses, etc.)
 5. Regulatory / business relief, especially in New York & San Francisco
 4. Flat Tax
 3. Cheap healthcare for employees
 2. Time with Family (“Forgiveness from my wife for working too hard!!!!”)
 1. End Iraq War/ Peace/Peace in the Middle East

As the new year and holiday approach we are asking for you to make your predictions for the following for December 31st, 2007.

 

 Predictions:

 Actual at time of polling:

 Dow Jones  12,225
Average 12,583 
Range 10,000-15,500 
   
 Oil  $63.05
Average $63.72 
Range $40-$101 
   
Interest Rates  5.25%
Average 5.34% 
Range 4.00%-7.50%