CEO Confidence Index June 2008

Employment Confidence and Investment Confidence Hit Lowest Levels Ever CEOs: US Needs Lower Taxes, Lower Regulations, Privatized Education, and Freer Trade

July 1 2008 by Chief Executive


Amidst a 10% decline in the Dow Jones Industrial Average over the last 30 days, the Chief Executive CEO Confidence Index plunged 11.3 points this month according to 129 top executives service by Chief Executive Magazine between June 13 and June 27. The leading economic indicator currently sits at 84.5, and has been below 100 points for the last fiscal quarter. Prior to March 2008, the overall Index has not been below 100 since 2003. One CEO, wishing not to associate his personal opinion with his role at his organization was quoted as saying ” It’s probably worse than I’ve indicated but I prefer to be an optimist.”

            All component indices, used to calculate the overall index, were in the red in June as well. The Investment Confidence Index, which is used to measure executive confidence in current and near-term US conditions, led the pack of losses. It dropped by 14.2 points (13%) to 93.1. Fewer than � of respondents (23%) said they were planning on increasing capital spending at their company while almost 40% (39%) said they were actually decreasing their spending. This is the lowest the Investment Confidence Index has been since 2002 when polling began. One respondent, also wishing to remain anonymous, confided that “The US government needs to reduce both the regulatory and tax burden on US corporations to encourage domestic capital investment.”

            To determine the reasons for America‘s recent economic plunge Chief Executive conducted additional research in June. CEOs were asked which policy position they think the US ought to take to increase or maintain American competitiveness. They were given choices about tax, economic regulation, education, and trade policy.

            The majority of CEOs expressed very strongly that the US economy needs to be able to sustain more economic dynamism. That is, to maintain competitiveness, American businesses and the American people need lower taxes, less regulation, more privatized education, and looser trade restrictions. This requires less spending overall, and CEOs have been vocal about the need for a simultaneous cut in domestic welfare spending as well as spending on the Iraq war. “The current economic policy has been a disaster.  Job creation has not materialized and we will be suffering from the huge deficit for years to come,” said Salvatore J. Bonano, Chairman of Xymox Technologies. “A small percentage of the money being spent in Iraq could be used to rebuild our infrastructure creating jobs and growth in other sectors.”

            The political implications of these findings are important especially since the US Presidential election is beginning to heat up. “CEOs are clearly negative on the economy yet are offering important ideas on what needs to be done,” said Edward M. Kopko, Chairman and Publisher of Chief Executive Magazine. “Among those are lower taxes and regulation, privatized education, and freer trade. The upcoming election is particularly interesting because of the extent of polarization between the parties with respect to these issues.”

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Confidence Index

 Index

 June, 2008

 May, 2008

 Monthly

 CEO Index 84.5 95.8 -11.3
 Current Confidence Index 99.6 112.9 -13.3
 Future Confidence Index 74.3 84.3 -10
 Business Condition Index 81.2 84.1 -2.899
 Invest Confidence Index 93.1 107.3 -14.2
 Employment Confidence Index 77.1 94.1 -17

CEO Index Bonus Questions, June 2008

 Please rank which country will be the greatest job creator in the future?

 Country

 Rank

 % of Votes

 China 1

 52.8%

 India 2

 26.8%

 Vietnam 3

 4.9%

 USA 4

 4.9%

 Brazil 5

 4.9%

 Russia 6

 3.3%

Note: Countries with only 1 response not reported.

 Please rank which country will create the most high paying jobs?

 Country

 Rank

 % of Votes

 USA 1

 44.5%

 India 2

 12.6%

 Germany 3

 4.9%

 Great Britain 4

 4.9%

 United Arab Emirates 5

 4.9%

 China 6

 3.3%

Note: Countries with only 1 response not reported.

 What does the U.S. need to do to create the most high paying jobs?

 

 Increase

 Decrease

 Taxation

 4.8%

 95.2%

 Regulation

 8.9%

 91.1%

 What does the U.S. need to do to create the most high paying jobs?

 

 Regulate

 Privatize

 Education

 25.0%

 75.0%

 What does the U.S. need to do to create the most high paying jobs?

 

 Strengthen

 Loosen

 Trade Restrictions

 29.7%

 70.3%