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CEO Optimism Drops In November Amid Election Results And Covid Spike

A new poll of more than 200 chief executives finds deep concern over the incoming Biden administration—and the dangerous direction of the pandemic.

In the wake of Joe Biden’s election as the next president of the United States and the sharpest increase in Covid cases since the beginning of the pandemic, CEO confidence in the future of the economy fell sharply in November, even as a majority of CEOs still predict their firms will see improvements in their finances in the months to come.

Chief Executive’s most recent polling of 211 U.S. CEOs—fielded from November 10-12—shows confidence in the current business environment little changed since last month, up only 1 percent from our October reading—at 5.9 out of 10 compared to 5.8 the month prior. CEOs say business is continuing to recover, with renewed orders and sustained consumer spending.

Their outlook for the business environment 12 months from now, however, fell 6.4 percent this month, to 6.4 on our 1-10 scale. This is among the largest single-month declines of the past 5 years for the CEO Confidence Index, and the largest in 2020. The last time the Index declined by a similar margin in a single month was in December 2018, when CEOs feared the consequences of an intensifying trade war with China and the subsequent cooling of the economy. It had then dropped by 7.3 percent.

The results of the election seem to have had the most influence on CEOs’ outlook. Many CEOs gave the 2021 economy a negative rating, saying they fear increased taxes, regulations and renewed Covid lockdowns under President Joe Biden.

“Increased govt spending, new regulations, possibly higher taxes,” Bill Osborne, owner of Osborne Properties, a real estate company in the Southeast, said were the main reasons behind his downgrade of the business environment a year from now.

“With Biden as president, I expect a much more difficult economy to navigate due to increases in business regulation,” said Steven Leafgreen, CEO of federal credit union Western Vista, whose outlook for business conditions at this time next year is “weak,” at 3 out of 10.

“We are doing better right now as we have emerged from Covid and booked a lot of orders,” said David Cox, CEO of global industrial manufacturer The Bradbury Group. “This will increase our profits short term before we then experience a downturn due to new admin policies.” For that reason, he rates future conditions a 6 out of 10, downgraded from a perfect 10/10 in the current environment.

For other CEOs, however, the focus isn’t so much on who’s occupying the White House but how soon we will be on the other side of the pandemic.

“Overall business seems to be ‘OK’ if you are not in the travel or restaurant or entertainment space,” said Bruce Levitt, president of safety-solution provider Levitt-Safety Limited. “I expect things to gradually improve if/when Covid eases.” He is, nevertheless, cautious in his forecast, rating the fall 2021 climate a 6 out of 10.

Slightly more optimistic is Tom Andrulis, CEO of IT service provider Intelligent Technical Solutions. He expects future conditions to be “very good,” at 7 out of 10 on our 1-10 scale: “15% of our clients had major issues caused by the pandemic. With the announcement of the vaccine, I believe things will improve over the next year,” he said.

“Consumers in foodservice such as restaurants and coffee shops or the like are at their lowest demand now,” said Andrew Ly, CEO of California-based Sugar Bowl Bakery. “But a year later, after the political dust is settled and the vaccine comes out, business will get better.” He rates his outlook for business a 9 out of 10.

Despite the dip in our forward-looking data, several CEOs polled showed enthusiasm for the year to come.

“A new administration, better trade and diplomatic agreements, the availability of a vaccine, reskilling of workers,” said Peter Altschuler, president of global marketing firm Wordsworth & Company, when asked to explain his optimism for the business climate in the year ahead. He, however, cautions: “Things are likely to get worse before they get better, given the obstacles being put in the way of a smooth transition.”

“As we recover from the pandemic, businesses and the market will expand demand,” said Gregory Gragg, CEO of business consultancy firm Blue Chair LLC, who forecasts business conditions to improve to a 9 out of 10 by this time next year.

“Jobs will increase, and consumers will start spending lot more,” said Prasad Reddy, CEO of footwear brand Twisted X. He forecasts an “Excellent” business landscape at this time next year, rating it a 9 out of 10, up from a 6 in the current environment.

In the end, Bo Andersson, president of NY-based valve manufacturer Flomatic, echoes what many other CEOs have been noting for several months now: “We need stability in the marketplace,” he said.

Election Impact

Our November polling looked into the impact the election results are having, if any, on various areas of corporate strategy. Unsurprisingly, a greater number of CEOs said their tax strategy is most impacted by the outcome (29 percent), followed by lobbying/regulation (21 percent) and health benefits strategies (19 percent).

Polled CEOs said that besides dealing with Covid-19 as a priority (58%), the new administration should focus its efforts on the economy and jobs (24%)—far ahead of any other issues. At the bottom of the list: everything else, from the deficit to taxes to healthcare to immigration, wages and education. None of those topics garnered more than 6 percent from those polled.

The Year Ahead

When looking at the impact of the business environment on their respective companies, fewer CEOs now forecast increases in profits and revenues for the year ahead: 54 and 64 percent, respectively, compared to 62 and 67 percent in October.

Similarly, the proportion of CEOs anticipating they would increase capital expenditures over the next 12 months dipped to 41 percent this month, compared to 44 percent last month.

The proportion of CEOs who say they plan to add to their headcount in the year ahead remained steady, at 47 percent vs. 48 percent in October.

With the exception of forecasted profitability, all measures are in line with pre-Covid levels, perhaps indicating that this month’s decreases are simply a correction from recent months’ increased optimism.

Sector & Size View

November data once again shows a very divided view of the business landscape among CEOs and a clear representation of how the current series of events has affected sectors differently. Healthcare and Real Estate CEO confidence plummeted in November, with those polled listing low occupancies, worker shortages, the increased cost of employee testing and PPE as some of the reasons for their outlook.

At the other end of the spectrum, Travel & Leisure CEO confidence experienced a substantial jump in November, with hopes for an effective vaccine and the subsequent reopening of locations leading the list of reasons.

On a year-over-year basis, Real Estate, Healthcare, Construction and Financial Services CEOs are showing the largest declines in confidence, while Travel & Leisure, Pharma and Transportation CEOs report increased optimism in business conditions a year from now.

Looking at confidence levels by company size, all size groups are reporting decreasing confidence in the future, with the largest swings occurring among the smallest and largest companies. Concerns over new regulations and higher taxes from the new administration are driving down confidence among the larger companies, while Covid-related uncertainty is impeding small business confidence.

Year over year, however, all cohorts except for small companies are now more optimistic than they were at this time last year.

About the CEO Confidence Index

The CEO Confidence Index is America’s largest monthly survey of chief executives. Each month, Chief Executive surveys CEOs across America, at organizations of all types and sizes, to compile our CEO Confidence Index data. The Index tracks confidence in current and future business environments, based on CEOs’ observations of various economic and business components.


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