Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, fell one-third (33.2%) in July, to 79.8.
All five components of the index fell significantly, with the Current Confidence Index showing the largest percentage decrease of 60.4% — dropping to 52.0. One CEO stated, “Not much confidence anywhere right now… most people are in a “hunker-down” mode”. Wayne Gorel, CEO, Gorell Enterprises, blames the media for contributing to the continued economic woes, “The media is saying how terrible things are, and the consumer is starting to believe them again. Things were starting to improve until this blitz about how we may be going into a double dip recession or even a depression like one headline story [stated] this week. The economy is growing at 3-4%, not great, but much better than last year. I just wish the media would get out of the way.”
The Investment Confidence Index fell by 40.8% to 79.0. Fully 24% more CEOs rated investment opportunities as “bad” in July than in June. One CEO lamented, “New ventures and new venture funding are basically non-existent”.
The Business Condition Index lost 31.9%, falling to 83.5.
The Employment Confidence Index dropped 26.4% to 76.6. Job creation remains a significant hurdle to economic recovery. The Obama Administration has proposed tax credits for companies that hire workers that have been out of work for twelve months or longer. Not all CEOs see the value of these tax credits. A CEO stated to Chief Executive, “Our hiring is increasing due to improved business conditions, not because of the current administrations so-called stimulus spending”. Stated another, “We don’t hire to get tax credits, we hire to do work”! Jim Schwarz, President/CEO, Able Mfg & Assembly added, “The plan to hire must be justified with an actual need. The cost of non-productive workers is not justified by the small tax benefit”. CEO sentiment was summarized by one CEO who told us, “Tax credits will not increase employment, improvement in business will increase employment. No one is going to hire people to get a tax credit when they have nothing for the new hire to do”.
The Future Confidence Index declined to 98.5, a loss of 23.7%. Many CEOs are taking a wait-and-see approach. “Uncertainty is the watch word,” commented a CEO. Another added, “My prediction has not changed – a double dip recession when the tax increases kick in”.
There may be a glimmer of hope on the horizon. In a series of surveys conducted by Chief Executive magazine in June, 2009, December 2009 and July 2010, companies have reported changes in their hiring plans. In all three surveys, 46% of companies reported hiring freezes. The glimmer of hope lies in the 12% that have changed from reducing headcount to hiring.
CEO Confidence Index, July, 2010
Current Confidence Index
Future Confidence Index
Business Condition Index
Invest Confidence Index
Employment Confidence Index