The recent boost in CEOs’ confidence in current business conditions is showing signs of slowing this month, up just 1.8 percent from our September reading—after a 7 percent rise last month and double-digit climbs over the summer.
CEOs’ outlook for the business environment 12 months from now also stalled this month, at 6.9 on our 1-10 scale, essentially unchanged from September.
Those were the findings from Chief Executive’s October polling of 487 U.S. CEOs from October 6-8. This is the first time since May that the indexes have not shown an appreciable month-over-month gain.
CEOs we polled say uncertainty about the upcoming election and when a vaccine or effective treatment for Covid-19 will become available are the main reasons for this hesitation.
“I think we’re at the tip of the iceberg on the impacts on Covid-19 to the global economy,” says Jerry Murphy, CEO of telecommunications services provider ACBB-BITS, echoing the general sentiment shared by his peers in our monthly poll. “Add to this the chaos of the upcoming election and you have a stew of uncertainty.”
The gap between those who expect the economy to recover swiftly with a vaccine and those who forecast lingering effects on the economy appears to be widening this month.
Tim Roach, CEO of Chicago-based financial company Lendr, rates his forecast for business a year from now a 5 out of 10, blaming overall market conditions: “There’s no real path out for small businesses to reopen. Leadership seems confused and uncertain what to do. This will have devastating consequences over the next 24 months,” he says.
“Covid’s long-term impact regarding consumer spending, real estate, taxes, lending and unemployment,” lists Steve Bugg, CEO of Great Lakes Credit Union, when asked to explain why he expects business conditions to be worse a year from now than they are today. “Also, the election results will impact the next four years, too.”
In contrast, many others believe the economy will bounce back once we get on the other side of the vaccine and election.
“I believe the economy will bounce back dramatically once there is an approved vaccine, which will cause infections to drop on Covid-19,” says Arnold Kamler, CEO of Kent International, a bicycle manufacturer based in Parsippany, New Jersey.
“Businesses opening back up for office work once a vaccine is available for Covid-19,” echoes J. D. Ewing, CEO and president of family-owned furniture retailer COE Distributing, to explain his forecast.
Meanwhile, CEOs report adjusting to the “new normal,” with 60 percent of those polled saying they have permanently rebalanced their mix of on-site, remote and hybrid workers. Another 15 percent plan to do so in the coming months.
Once again this month, an increasing number of CEOs forecast increases in profits and revenues for the year ahead: 62 and 67 percent, respectively, compared to 59 and 62 percent in September.
The proportion of CEOs who anticipate increases in capital expenditures and hiring shows a similar trend, with 44 and 48 percent this month, respectively, compared to 40 and 42 percent the month prior.
And for some of the CEOs surveyed, the “talent war” that was in place prior to Covid-19 has returned.
“We are struggling to get new employees when needed to replace or add on,” says Pete Barile, president of TN-based furniture manufacturer Daniel Paul Chairs. “We are in a large industrial community with many national/international companies who also struggling for new workers. They are paying their very high-trained employee rates just to get some new warm bodies to show up. We cannot match their rates nor benefits just to attract possible candidates to start training. It’s a big problem in our area for most smaller companies, no matter what the business is,” he says.
Todd Lokash, president of Paragon Industries L.P., a TX-based manufacturer of electric kilns, heat treating ovens and custom furnaces, echoes the sentiment: “The biggest obstacle is finding people that are willing to work. The increased unemployment benefit has ruined the market for qualified candidates,” he says.
Overall, nearly half of CEOs across the country say they’re looking to hire new workers over the coming months, compared to only 17% in the midst of the crisis last April.
October data once gain shows significant variations in CEOs’ outlook—very much a representation of the impact the Covid-19 pandemic has had on the various sectors of the economy. Real Estate CEOs have reported the largest decline in confidence this month, at -21% since September.
Chris Clemente, CEO of Reston, Virginia-based Comstock Companies, says although his company has been deemed essential and continued operating through the year, he fears the U.S. economy and employment market will suffer irreparable harm depending on the outcome of the election.
Looking at confidence levels by company size, October data is fairly flat across ranges, with the Index bordering on a “very good” rating of 7 out of 10.
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.