CEO Confidence Index December 2008
In Search of the Interminable Bottom CEOs See Flat Dow, Higher Oil and Interest Rates
January 8 2009 by Chief Executive
The Chief Executive Magazine’s CEO Index, the nation’s only monthly CEO Index, sunk to another all-time low in December, according to 245 top executives surveyed. Executive confidence in
The CEO Confidence Index currently stands at 40.9 points, down 9.1 points, 18 percent, from 50.0 points back in November. The Employment Confidence Index, a sub-index used to calculate overall confidence in the job market, dropped 38 percent, to 22 points in December.
“The recent trends we are seeing in confidence are truly unprecedented. We were concerned when confidence was at parity with 2002 levels. Now it’s 60 percent below that,” said Edward M. Kopko, CEO and Publisher of Chief Executive Magazine. “We believe eight percent unemployment is right around the corner,” Kopko concluded.
Over 90 percent of respondents said that current employment conditions were “bad,” and the same was true for their position on overall business conditions. Furthermore, almost 80 percent of respondents said they expect employment to fall over the next quarter. Maintaining a quite bearish outlook, one executive said, “It’s going to get worse before it gets better,” while the other went as far as to say, “The economy is nearing a total collapse.”
The Investment Conditions Index was the best performing of all the components, even though it also fell substantially in December (by almost 13 percent). Still, 38 percent of respondents said they would characterize investment opportunities as “good,” perhaps a signal that the markets may be at their lowest. However, some CEOs were still wary of a recovery anytime soon, one said, “Yes we have seen the bottom but fear is still driving consumers’ thoughts.”
CEOs attributed a variety of factors to
Given the radical swings in the Dow, interest rates, and the price of oil recently, Chief Executive conducted additional research this month to get CEOs’ predictions for these key economic determinants.
In this polling, the CEOs said they expect the Dow, at 8772 when polling was conducted, to remain relatively stable. The average prediction for the end of 2009 was 9253, or up five percent. CEOs also predicted that the interest rates, currently at 0.25 percent, will rise to somewhere near 1.19 percent over the next year. Lastly, they estimated the price of oil to rise by about 50 percent to $55 per barrel. CEO predictions last year were unreasonably bullish, substantially overestimating the value of all three indicators (for full results, see below).
CEO Index, December 2008
Current Confidence Index
Future Confidence Index
Business Condition Index
Invest Confidence Index
Employment Confidence Index
Predictions For 2009
Price of Oil
Fed Funds Rate
Predictions For 2008
Price of Oil
Fed Funds Rate