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CEO Confidence Index March 2009

CEOs Still Uncertain About the Future and Don’t Expect a Turnaround until 2010

CEO Confidence Index, a leading economic indicator of executive confidence and the nation’s only monthly CEO Index, experienced a slight improvement in all of its indices with the only exception of Business Conditions Index in March.

In March, the CEO Confidence Index rose 2.4 points, or six percent, to 41.6 points. In addition, the Employment Confidence Index, a sub-index used to calculate overall confidence in the job market, increased 5.1 points, or 22 percent, to 28.2 points, the biggest percentage increase recorded in March polling. The second largest percentage gain was in the Current Conditions Index, which rose 5.8 points, or nearly 12 percent, to 54.9 points.  Finally, the Investment Confidence Index rose 6.1 points, or 8.5 percent, to 77.8 points. The gains in the Future Confidence Index were negligible as the Index rose 0.2 points, or 0.6, to 32.7 points.

“After months of steady declines, it is hard to view these slight improvements in CEO confidence as a secure sign of stabilization,” said JP Donlon, Editor-in-Chief, Chief Executive magazine. “Confidence across the board is still hovering around its worst levels we’ve ever seen, and a significant majority of CEOs still expect the economy to get worse before it gets better.”

According to the CEO Index polling, CEOs predict the Dow to hit 6000 during this downturn and do not expect a turnaround until 2010.

“I see no underlying fundamentals to be encouraged about,” said Dan Lebish, President and CEO, United Concordia Dental and HM Insurance Group. “Whether you look at sales, production, housing starts, employment, or inventory levels, they all point to a continued recession/depression. In addition, the stimulus bill misses one of the critical factors causing this downturn a significant excess on the supply side due to new production capabilities in China, India, Brazil, etc. Simply put, more has been produced than then there is capacity to buy, putting downward pressure on prices. If you add limited access to credit, consumer fear, increased propensity to save versus spend, it is clear we are looking at another 12-18 months of economic downturn.”

In line with Lebish’s predictions, 73 percent of CEOs predict the economy will decline over the next quarter, while 75 percent expect the unemployment to increase.

“We continue to face a very turbulent economic environment,” continued Donlon. “It is impossible to tell how some of the current Administration’s policies will impact the economy. However, CEOs’ continued pessimism doesn’t send a positive signal, and we are not likely to see an upturn before their attitude changes.”

CEO Index, March 2009
Respondents: 291

Index

February,2009

March,2009

Monthly Change

CEO Index

39.2

41.6

2.4

Current Confidence Index

49.1

54.9

5.8

Future Confidence Index

32.5

32.7

0.2

Business Condition Index

15.9

11.9

-4

Invest Confidence Index

71.7

77.8

6.1

Employment Confidence Index

23.1

28.2

5.1

 CEO Index March Bonus Question

What do you think will be the lowest point the Dow will hit during this economic downturn?

Average

5691

Median

6000

Mode

6000

When do you think the economy will begin to turn around?

Q1 2009

1.7%

Q2 2009

5.8%

Q3 2009

11.0%

Q4 2009

22.3%

2010

35.4%

2011

13.7%

After 2011

10.0%

About Chief Executive

Chief Executive magazine (published since 1977) is the definitive source that CEOs turn to for insight and ideas that help increase their effectiveness and grow their business. Chief Executive Group also produces e-newsletters and online content at chiefexecutive.net and manages Chief Executive Network and other executive peer groups, as well as conferences and roundtables that enable top corporate officers to discuss key subjects and share their experiences within a community of peers. Chief Executive facilitates the annual “CEO of the Year,” a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of peers, and is known throughout the U.S. and elsewhere for its annual ranking of Best & Worst States for Business. Visit www.chiefexecutive.net for more information.