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CEO Confidence Index September 2009

CEO Confidence Index Improves But Dark Clouds Remain

Chief Executive magazine’s CEO Confidence Index, the nation’s only monthly CEO Confidence Index, climbed 8.6% in September, to 84.7. Though the index is up 116% from its low point in February and 65% for the year, it remains 16% lower than a year ago. 

All five components of the index rose in September, but significant concerns persist. Fully 81.9% of CEOs polled rated current business conditions in the U.S. as “bad”; there is no consensus about when the economy will improve.

In September, 38.3% of CEOs stated that they expect the economy to grow over the next quarter.  Tim Koltek, the CEO of Terrapin Energy, is one of the optimists: “I expect the economy to bounce back with more of a roar than a whimper”. 

Nearly half (41.8%) of the CEOs surveyed believe there will be little or no growth in the economy over the next quarter. One respondent remarked, “I’m fairly confident we’ve reached an economic bottom, but I’m concerned we’ll bounce along here for quite a while.”

A significant minority (19.8%) of CEOs is skeptical of an impending recovery and believes the economy will continue to contract in the next quarter; while this cohort is much smaller than the 73.3% of CEOs who felt this way in March, it’s still a significant group. According to Mark Renkert, the Chairman of Fairhaven Crowne: “Capital remains tight. Key to recovery will be job generation, consumer spending, capital restriction easement, and energy price moderation. We don’t see any kind of recovery until 2013.”

The Investment Confidence Index was the bright spot, climbing 12.3% in September to 102.4. A majority of CEOs (63.2%) believe investment conditions in the U.S. are “good” or “normal” at present.

The Employment Confidence Index remains the lagging index. While it increased 10.5% in September, it stands at 63.7 compared to. 101.9 last September (before the financial crisis began).  Only 19% of CEOs polled believe that employment will increase in the next quarter; 44% believe it will stay the same. As one CEO stated, “Unemployment is still the barrier to increased confidence.” 

One respondent summarized the global business environment and his concerns: “The US seems to be very gradually rising from its depths but we remain very close to bottom and are fragile. Those of us running multinational companies are still feeling Europe’s weakness, and just beginning to feel South American’s recovery. Asia is too early to tell as domestic consumption recovers but cannot be relied upon.”

So what’s the prognosis? One respondent summed up the challenges ahead: “The panic is over and we have all demonstrated our speed in stopping the bleeding. Now we will get back to our true collective strengths: reinvention, regeneration, renewal and ingenuity.”

CEO Confidence Index, September 1, 2009
Respondents:  231

Index

August, 2009

September, 2009

Monthly Change(%)

CEO Index

77.4

84.7

8.6

Current Confidence Index

58.0

69.5

16.5

Future Confidence Index

90.5

94.9

4.6

Business Condition Index

81.1

82.9

2.2

Invest Confidence Index

89.8

102.4

12.3

Employment Confidence Index

57.0

63.7

10.5

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