CEO Confidence Index August 2003

CEOs’ perception of the American economy is improving, and they believe that, on balance, President Bush’s economic policies are having a positive impact. But corporate leaders remain deeply concerned about the effects of globalization and job losses.

Those are some of the findings of Chief Executive magazine’s August survey of 6,000 readers, the majority of whom are chief executives and their peers. Known as the CEO Confidence Index, this is the only direct survey of CEO opinion conducted via email. Response rates this month were modest because of summer vacations, but 300 responses remained statistically valid.

 Responding to a supplementary “bonus” question, slightly more than 54 percent of respondents said the Bush Administration’s policies were either very positive or somewhat positive versus 21 percent who said they were either very or somewhat negative. Significantly, nearly one in four said Washington‘s policies were having no impact at all. (See first chart.)

In their written comments, CEOs reflected more worry than glee, particularly in the manufacturing sector. “Our policy of world markets has created a wonderful scenario for multinational companies and their customers,” said Thomas Jennings, president of Barrow Manufacturing in Winder, Ga. “The growth these corporations will achieve, however, will not be reflected in increasing employment. The newly created jobs these corporations bring will be sent offshore.”

Robert Tunno, president and chairman of Breeze Industrial Products in Saltsburg, Pa., had similar worries. “I think that the Administration is doing all the right things,” said Tunno. “However, I am concerned with the continual erosion of the U.S. manufacturing base as more companies source products in China. Unless we see a manufacturing pick-up, I believe that the recovery will be sluggish despite government stimulus.”

Despite these worries, the overall CEO Confidence Index rose to 127.9, its highest mark since the magazine started polling readers by email in October 2002. (See second chart.) That represented a 4.9 percent increase. The largest single improvement, however, occurred in the Current Confidence Index. For many months, CEO attitudes toward present business conditions has lagged far behind those toward Future Confidence. That suggested a lack of confidence in the here-and-now.

But in August, Current Confidence rose sharply, to 120.2, while Future Confidence ebbed slightly, to 133.1. The current confidence number reflected a 13.2 percent jump. “Obviously, today’s conditions are improving,” said Edward M. Kopko, CEO and Chairman of the Chief Executive Group. “The wide gaps between perceptions of today and tomorrow are narrowing.

The Index 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 nonservice industry CEOs.

Chief Executive is a controlled circulation magazine that reaches 42,000 chief executive officers and their peers. It is published 10 times a year and reaches a total readership of 143,000. 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. Jack Welch, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored throughout the award’s 17-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.