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CEO Confidence Index March 2007

Business Conditions, Current Confidence Most Lacking CEOs Call For Changes in Healthcare, Especially Portability

On the heels of the recent dip in the stock market, the Chief Executive Magazine CEO Confidence Index fell by 10.9 points, according to 213 executives surveyed. The leading economic indicator currently stands at 160.1. All component indices, composed of questions about specific parts of the economy and used to calculate the overall CEO Index, fell this month as well.

Some of the sub-indices fell more than others. The Business Conditions Index fell substantially by 21.7 points down to 172.7 (down 13%). Only 42.3% of respondents said they would characterize current business conditions as “good,” the lowest portion to do so since October of 2005. This was the largest one-month drop for the Business Conditions Index since May of 2005.

The Current Confidence Index also contributed handily to this month’s drop in confidence, falling by 18.9 points to 197.2. “The stock market dip will probably impair consumption, growth, and investment marginally in the short term,” said one respondent noting the reaction of consumers to the recent movements in the stock markets. One respondent who wished to remain unidentified said the economy may “find [itself] in a recession in the 4th [quarter] of 2007 or first [quarter] of 2008.”

Compared to the plunge in Current Confidence, the fall of the Future Confidence Index by 5.5 points is relatively small. In fact, many executives voiced optimism about the future. Albert Helmig, CEO of Grey House said that “while the credit issues in sub-prime and real estate in general should result in some softness in consumer spending, the aggregate advances in productivity … should medicate any real downturn.” Another executive said, “There is a current ‘settling’ down, but it is a short-term adjustment.  Growth will continue.”

Chief Executive Magazine also conducted additional polling in March to determine CEO attitudes on the issues facing the American healthcare system. Almost all CEOs surveyed (91%) reported they were in favor of making healthcare portable.

CEOs were more split, however, on the issues of who should provide healthcare insurance and whether healthcare should be provided universally. CEOs were split 48% to 52% on the issue of universality. Favoring universality, one CEO opined, “We are probably moving towards a quasi socialized medicine program for the United States. How we take care of our sick, elderly and homeless defines us as individuals and as a country. Our U.S. Congress will do nothing until we let them know we want to achieve some help for those in need.”

CEOs were also split over who should provide healthcare insurance to individuals. CEOs were asked whether the government, corporations (the current system), or insurance companies should be the primary provider. Most CEOs (53%) favored a system where insurance companies provide insurance directly to consumers. One respondent said, “Auto insurance should be the model for health insurance. Responsibility has to be with the user. Now, it is viewed as free. Make it portable, tax deductible and in control of the individual.” Only 26% felt the current system, whereby companies provide healthcare insurance to individuals, was best. Lastly, 21% felt it was the government’s job to provide healthcare. Said Jim Scatena, CEO of FloraCraft, “We must continue to shift the management of healthcare from employers to consumers.  Many employees who have good health care insurance have no idea of the final cost and therefore they have no incentive to help contain those costs.” “The opinion of CEOs, like much of America, is divided,” said Edward M. Kopko, CEO of Chief Executive Magazine. “However, most CEOs welcome the widespread adoption of insurance, portability, and agency considerations to keep costs low.”

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, March 2007

Respondents: 213

  Mar 07 Change from Prev Month
 Ceo Index  160.1(10.9)
 Current Confidence Index 197.2(18.9)
 Future Confidence Index 135.0(5.5)
 Business Condition Index 172.7(21.7)
 Invest Confidence Index 139.1(4.0)
 Employment Confidence Index 173.3(7.7)

Are you in favor of universal healthcare?

 Yes

 47.9%

 No

 52.1%

Would you be in favor of portability of health insurance?

 Yes

 91.4%

 No

 8.6%

Who should provide healthcare insurance?

 Government to Individuals 21.4%
 Companies to Individuals 25.7%
 Insurance Companies to Individuals 52.9%

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