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CEO Optimism Ticks Up In August, As More Businesses Predict A 2021 Recovery

A survey of nearly 500 U.S. CEOs shows an increasing number of companies planning for renewed growth in the months ahead—if the nation comes together to overcome the challenges of Covid.

Chief Executive’s polling of 495 CEOs in early August shows confidence in current economic conditions continuing to increase, clawing back another 2.5 percent of its Covid-related losses, to 5.3 out of 10 on our 1-10 scale. The Index is still down 26 percent since its February peak, but it has regained more than 30 percent since its bottom in May.

Similarly, CEO confidence in business conditions 12 months from now is also on the rise, up 1.1 percent since July and 8.6 percent higher than it was at this time last year. The leading indicator is now back to where it was in January, before the Covid crisis. Surveyed CEOs say they are hopeful about the prospects for a coronavirus vaccine or treatment, renewed sales activity and adaptation to what has become the ‘new normal’ for business.

“Business conditions are likely to be very good next year, assuming the Covid crisis is under control,” says Scott Heim, president of Middleby Ventless Solutions, noting that for that to happen, consumers will need to start spending at the usual rates, businesses will have to pull furloughed labor back to work, and business leaders will have to have the confidence to risk capital on new products and services.

“My forecast is based on a determined effort by all economic stakeholders to resolve to succeed,” echoes Casey Mahon, president and CEO of St. Cloud Window, a mid-sized manufacturer of custom architectural products. “If financial markets can be invigorated and developers gain confidence their investments will be secure, decisions to move forward will be made swiftly, and the comeback could be in the form of a tsunami.”

“All elements of business, particularly banking/finance components, need to not panic,” says Paul Bennett, president, CEO and owner of Repsco. “We will overcome this global depression, but the key components of our society MUST work together to maintain a free enterprise system that was established by the founders of this great nation.”

“Collaboration with competitors across our industry to share best practices is at all-time high, as we are all in this together,” says Kevin McCarty, CEO and chairman of West Monroe, a technology consulting firm.

And while a great number of CEOs cited the upcoming election as a factor in their confidence level—both up and down—many now say it no longer matters who wins, as long as we get past it.

“Election will be over and whoever wins, it is less uncertainty,” says Andrew Ly, CEO of Sugar Bowl Bakery to explain his optimism in 2021 business conditions.

Carl “CJ” Joyner, CEO of healthcare logistics firm TRIOSE, agrees: “I believe once we get past the election, no matter who wins, the economy will open back up. The weariness of the Covid issues and the social unrest will subside,” he says. “I think we will see a totally different mindset among the majority of individuals after the election. It will not be back to the old normal, but we will have a new normalcy that will get capitalized on.”

Planning for the Recovery

Not all CEOs agree with the majority’s optimism. Many fear more shutdowns, higher taxes, a severe recession and hyperinflation as reasons for their concerns. But the survey finds a steady month-over-month uptick in the number of those forecasting increases in profits and revenues for the year ahead: 51 and 53 percent, respectively, in August compared to 46 and 43 percent in July. Though still off their pre-crisis levels by considerable margins, those numbers have now more than doubled since April.

For months now, we have been seeing a tapering of negative forecasts across all four indicators we measure (revenue, profit, headcount and capex). With respect to capital expenditures, the August poll shows an increase of 5 percentage points vs. July (to 38 percent) while hiring projections—flat for a couple of months—jumped 10 percentage points this month (to 35 percent).

Surveyed CEOs say nearly two-thirds (65 percent) of their workforce is currently working remotely, compared to only 14 percent prior to the pandemic. Looking at the work environment a year from now, they say they anticipate keeping 40 percent of their employees in a remote setting.

Sector View

Looking at confidence levels by industry, the data shows an increasing number of sectors turning positive this month, with Construction/Engineering/Mining, Real Estate and Technology/Software/Telecommunications joining the optimism trend. Across those three sectors, CEOs say demand is the main factor boosting their forecast for the year ahead.

Looking at confidence variations year over year, the data tells a similar story, with—as one would expect—Travel & Leisure CEOs ranking as least confident in the economic environment 12 months from now. Interestingly, although Real Estate CEOs showed one of the strongest increases in optimism month-over-month, they remain far below their August 2019 level.

When looking at CEO confidence by company size (by annual revenues), most peer groups are flat month-over-month, except for large company ($1 billion+ in annual revenues) CEOs, whose confidence in the Q3 2021 business conditions increased by 20 percent, to “very good” at 7.0 out of 10 on our 1-10 scale. This is the first time in several months that large company CEOs show more confidence in the future than their smaller counterparts, and many of them say their optimism is rooted in hopes that the Covid crisis will be resolved at that point and that business will have improved.

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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