CEO Confidence Jumps 9.5% in April to Highest Level Since May 2011

The CEO Confidence Index, Chief Executive‘s monthly gauge of CEOs’ expectations for business conditions for the next 12 months, saw its highest month-over-month gain in the past two years, rising 9.5% to 6.07 out of a possible 10. The rating of current conditions also saw an uncommonly high monthly gain, rising 8% to 5.70 out of 10.

How confident CEOs are in overall business conditions varies greatly by company size. For companies with greater than $100 million in revenue, confidence was rated at 6.66 out of 10. That is substantially higher than the 5.95 rating for companies with between $10 and $99.9 million in revenue and a staggering 18.3% greater than the 5.44 rating given by CEOs of companies with less than $10 million in revenue.

Interestingly, most of the comments received from the CEOs of these smallest companies cited the federal government as the reason for their pessimism. The CEO of a small media company said, “Until the Federal government gets its proverbial act together, e.g., reduce spending, pay down debt, reform the incredibly complex tax code, etc., I expect the recovery, such as it is, to remain sluggish.”

The lack of appreciation for the federal government’s decision making and dysfunction was not limited to CEOs of these small companies. The CEO of a middle market manufacturing company reported he is “really surprised that the economy and our business levels are stronger than budgeted expectations. We want it to stay that way.”

The majority of comments received from CEOs were skeptical of business conditions, but ratings for business conditions and expectations for individual businesses are improving. Nearly 73% of CEOs surveyed expect their revenues to increase over the next year, and almost two-thirds expect increased profit.

Selected Comments from CEO Respondents

“Ramifications of Obamacare costs, regulations, and global economic conditions create uncertainty in market and costs. Now, additional concern that the liberal tendencies of government will continue in the next administration, which is strongly expected to be Hillary Clinton.”

“As we are in building products distribution, and as the housing market is recovering despite a weak overall economy, our business is recovering nicely.”

“The State of Illinois is lagging in recovery because of poor policy choices made by those in Springfield and Chicago.”

“Our traditional construction business continues to shrink – the way we grow is by getting into new energy saving services for our clients.”

“We expect to see downward trends in approximately three to five years. We are preparing for that probability in a multiplicity of ways, such as debt retirement, offset revenue streams, etc.”

“Economy remains in a stall. Out of control government spending, onerous regulations stifle domestic investment and job creation.”

“Still too much uncertainty. Bad competitors have been weeded out. Everyone else is protecting profits. Live to play a better day.”

“Obamacare costs and overhead burden both unknowns and known are holding back investment in our products by our customers.”

“Tax increases, regulations and Obamacare will continue to be headwinds offset somewhat by the halo affect of Fed artificially inflating equity and housing prices and depressing interest rates. Unfortunately the Fed will have to ratchet down in the next 12-18 months and we will be left with only the headwinds. Obamacare especially will be a major economic drag as uninformed people begin to realize what the true cost and complexity will mean to them. We already know that our employees will pay at least +6% more in premiums starting Oct 2013 IN ADDITION to actuarial increases that are also expected to skyrocket from the mandates.”

“We are in the food service distribution business located in upstate New York. The overall business climate in our marketplace is flat at best, and more competitive than ever. We have had many of our customers close over the past 3 years, with very few new ventures coming on board.”

“Our agent is projecting Obamacare-related increase of 30%+next year and he says we’re on the lower end of what he’s projecting for clients.”

“The fed’s “sequestration” is slowing kicking in now and impacting our customers to not make purchases and hoard their cash due to the uncertainty of government spending, lowering our lending revenue.”

“We are seeing a form of stagnation in financial transactions…fear on the part of banks as they deal with unprecedented levels of regulation and uncertainty surrounding the regulations (particularly as it pertains to the CFPB). I do not see a path to breaking this logjam as Washington, in particular the Administration, seems hell bent on continuously victimizing the financial markets and banks in particular.”

“Government regulations and Healthcare reform create uncertainties about the future which dominate small business vision.”

“It appears that a combination of tax increases and the uncertainty caused by the sequestration and continuing turmoil in Washington have many of our customers…industrial businesses…unwilling to make purchases and execute on planned expansions.”

CEO Confidence Index — April 2013

Respondents: 182

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?