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CEO Confidence Index October 2009

CEO Confidence Index Declines Slightly

Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, fell 8.9% in October to 77.8. The CEO Confidence Index had shown signs of improvements in August and September, but took a downward turn in October. 

All five components of the CEO Confidence Index fell in September, with the Employment Confidence Index showing the largest decline. This component of the index fell 23.4% to 51.60. The fall reflects concerns over the increase in the unemployment rate to 9.8% – the highest unemployment rate seen since the beginning of the CEO Confidence Index in 2003. The CEO Confidence Index has been an accurate predictor of the employment rate, suggesting that most CEOs don’t expect employment woes to improve in the near term. Nearly half of the CEOs surveyed (49.7%) believe that unemployment will increase next quarter, an increase from 36.6% in September. 

The Future Confidence Index fell 12.3% to 84.50. One CEO commented, “Things seem to have bottomed out, but we’re not seeing any significant movement upward yet.”

In October, the Business Conditions Index fell 7.8% to 76.90. A handful of CEOs stated they expected the economy to show slow improvement over the next several quarters. And a few CEOs are taking advantage of weak competitors and expanding market share. 

The Investment Confidence Index fell to 98.60, a decrease of 3.9%. One CEO stated, “Investment opportunities are good; however, due to current lending practices, most companies are unable to capitalize on these opportunities.” Another CEO lamented, “Banks need to keep lending to the small business man.” Mitch Bloom, President of Aviva Labs stated, “We feel that many of our competitors are in a bunker mentality, so we have chosen to invest aggressively for growth.” 

The Current Confidence Index showed the smallest rate of decline at 2.5%, having fallen to 67.80.   One CEO stated if we have learned anything it is that we need to continue to progress in a very cautious manner. My confidence is strong, but I continue to be very conservative. 

The unanswered question is when will we hit bottom?  Fully 48% of CEOs believe there will be no change in the economy in the next quarter. Only 31.2% expect gradual growth while 20.2% predict gradual decline. 

Employment remains the impediment to an improving economy. One CEO stated “I believe that these new levels of unemployment are the “new normal” as companies continue to right-size.”   

Many CEOs are poised for an uptick in the economy; one CEO commented “Our business is leaner and smarter than ever before. As the economy evolves, we are better prepared to respond to the RIGHT opportunities when they present themselves.”

CEO Confidence Index, October, 2009
Respondents:  173

Index

September, 2009

October, 2009

Monthly Change(%)

CEO Index

84.7

77.8

-6.9%

Current Confidence Index

69.5

67.8

-1.7%

Future Confidence Index

94.9

84.5

-10.4

Business Condition Index

82.9

76.9

-6.0%

Invest Confidence Index

102.4

98.6

-3.8%

Employment Confidence Index

63.7

51.6

-23.4%

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