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CEO Confidence Index Jumps 6.5%, But Most CEOs Are Still Wary About Business Conditions

The CEO Confidence Index rose 6.5% in February to 5.63 out of a possible 10. The eight-month high demonstrates a notable uptick in CEOs' optimism about business conditions, but forecasts for growth and hiring remain limited.

The CEO Confidence Index, Chief Executive‘s monthly gauge of CEO expectations for overall business conditions over the next 12 months, rose 6.5% this month to 5.63 out of a possible 10. The eight-month high demonstrates a notable uptick in CEOs’ forecast optimism.

More specific quantitative measures of optimism for the next 12 months showed some strength also: about 60% of CEOs forecast an increase in profits, and nearly 75% predict an increase in revenue at their companies. Those planning to increase employee count and capital expenditures outnumber those who plan to decrease them – nearly 3 to 1. Middle-market companies are the most optimistic about these figures with at least some growth broadly anticipated in all areas, while companies with less than $5 million in annual revenue largely expect limited capital expenditures for the next 12 months.

Despite the news in numbers, qualitative evaluations of future business are still far from sunny. Laurie Brunner, President of MainStream Management, characterizes the situation memorably: “Many CEOs and other leaders agree with me when I characterize the current state of the economy as a square of jello. It just sits there. Yes, you can move the plate forward and perhaps the jello has some forward inertia, but in the blink of an eye it reverts back to its inert gelatinous state.”

Others in our survey did agree that prospects are not particularly rosy. “Business is good, but a lot of the volume uplift has already happened,” wrote the head of a mid-sized automotive manufacturing company. “Many of the banks tell me they cannot see a path forward,” a CEO in the financial services industry wrote.

Governmental regulation continues to figure largely in negative views of future business performance. “We have an administration and one entire political party that hates business, success, profits and private investment in America and enjoys regulating needlessly,” wrote the head of a large consumer manufacturing company, summing up popular CEO sentiment.

The Current Confidence Index, a measure of current CEO confidence which tends to move parallel to the measure of forecast confidence, also experienced a boost, up 7.8% to a value of 5.32 out of a possible 10.

When asked about their top three priorities for business this year, CEOs’ responses varied quite widely (within the realm of the financially sound, of course). Some had an HR-friendly mantra ready, for example: “People, Partnerships, Processes”. Others were less focused on the how and more on the what: “Exceed budget. Exceed budget. Exceed budget.” On the whole, specific priorities that emerged as primary CEO concerns for 2013 were succession planning, customer attraction and retention, and the consolidation of existing resources to drive increases in profit.

Selected Comments from CEO Survey Respondents

“It’s a mixed bag out there related to the housing and construction market. We have come out of the intensive care unit and have been in the recovery room this last year. Now we want to get well and get on with our biz and show some sort of growth and profitability.”

“We see anemic growth in our markets. There remains much uncertainty about the upcoming burden of taxes and health care. This is a national issue and compounded in my state of California.”

“We are HQ’d in CA. The retroactive state income tax increase has already negatively impacted the small momentum we established leading up to the elections … there is no encouraging news that would make us optimistic about the next two years.”

“There is a pervasive reluctance to spend on any initiative – even if the project will create quantifiable steps toward performance improvement. The uncertainty of federal policy mandates along with costs associated with ObamaCare have left many business leaders in a wait-and-see mode.”

“Expect to see continued slow growth for some time.”

“Regulation emanating from WDC and State Capitol is slowly sapping the life out of our business.”

“The government has gotten too large to have any value other than as a jobs creator itself – but then where is the revenue coming from to support government sector job growth? Officials are clueless.”

“I believe that the Fed’s policy of pumping $69 B per month into the bond and mortgage markets is fueling the stock market in a manner that is divorced from economic reality. Large businesses can prosper in such an environment, but entrepreneurs can not. We are moving incrementally toward a monopolistic and oligopolistic economy. This is already leading to a loss of innovation.”

“Our biggest concern is federal government regulations and the continuing trend towards government being more of an adversary. A major capital project is in the works for 2014 and we need to decide if the investment is in the USA, a free trade partner, or the lowest-cost country. At this point it looks like Canada is in the lead due to closeness to market, educated labor force, and better government rankings regarding known factors in regulation, tax, etc.”

“In construction we needed just a little help from the economy. That is what we got: just a little help.”

CEO Confidence Index — February 2013

Respondents: 218

January 2013 February 2013 Monthly Change
CEO Confidence Index 5.29 5.63 +6.5%


What do you expect overall business conditions to be like one year from now on a 1 -10 scale? (10 = Excellent)

What is your assessment of current overall business conditions on a 1-10 scale? (10 = Excellent)

Over the next 12 months, what changes do you forecast for your firm compared to the past 12 months?


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