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CEOs Shrug Off Market Correction, Coronavirus As Short-Term Issues In Early-March Poll

Chief Executive Group's March survey finds CEOs remain confident about 2020 and beyond. They say reaction to coronavirus is overblown and economic indicators don’t give any reason to panic—yet.

Chief Executive’s latest survey of U.S. CEOs—fielded March 3-5 in the middle of wild swings in stock markets and growing fears over the spread of COVID-19—shows their optimism in future business conditions undeterred despite the headwinds.

At 7 out of 10 on our 1-10 rating scale, CEO confidence in the business landscape for the year ahead remains at its highest level since the third quarter of 2018. CEOs say their sustained optimism stems from the belief that the impact of the coronavirus on American businesses will subside, and trade negotiations with China and other international partners will continue, even as more companies find new ways to support their supply chain.

In the meantime, however, confidence in current business was rated 6.6/10, down 7.5 percent since last month, retreating to lows unseen since September 2017. Forty-one percent of CEOs we surveyed say the coronavirus is having a “severe” or “major” impact on their confidence in the current environment, as it brings about supply chain disruption and the risk of slowing consumer spending.

The CEO and president of a mid-sized industrial supplier says growing levels of political uncertainties and waging trade wars are only being “further exacerbated by the global coronavirus outbreak.” He rates his confidence in the current business landscape a 5 out of 10.

Jim Nelson, president of manufacturer Parr Instrument Company, views the current environment as “weak” with a 4/10 rating, which he says is an “extremely weak start to 2020. China is in a severe downturn…coronavirus hysteria is killing economic activity, and a recession is likely to follow. Too much uncertainty in the marketplace with an election year thrown in on top of it all.”

Yet, the majority of those we polled say much of the current hurdles, including the stock market correction, are overreactions that will resolve in the near term.

“The economic dip that will be caused by the coronavirus will be erased by the vaccine cure, and the economy will rapidly recover,” argues the CEO and president of a domestic retail trade company, who believes the market is overreacting to the economic impact of COVID-19.

The CEO of a large, global industrial manufacturing company says that although the pandemic may be wary of caution in the short term, there is no reason to panic. “The coronavirus situation is putting a damper right now on expectations and causing caution,” he says, “[but] without this factor, the economy would be as good if not a little better than 2019.”

“The overall business climate is strong,” echoes the chair and CEO of a mid-sized service organization. “Even with the coronavirus, business will get through and rebound strongly after the election.” He warns others to “stop the overreaction” and look to history: “This will be a small blip in comparison,” he says.

“General conditions are good. Raw materials are relatively cheap, there is a lot of cash around, and plenty of people have jobs,” says the CEO and president of a wholesale distribution company in the Southeast to explain his forward-looking rating of 9 out of 10. “The biggest risk at the moment is the coronavirus, but so far fear is driving reality more than actuality.”

Several other CEOs agree that they remain optimistic in the future because the U.S. economy is robust and consumer confidence high—and that Wall Street is being unjustifiably erratic. In fact, only 20 percent of polled chiefs say the market swings have had a “severe” or “major” impact on their forecast.

“Once we get past the coronavirus issues and get the election (assuming Trump stays in office) out of the way, the business fundamentals will be the driving factors,” says George Platt, CEO of ESI Estech, a technology company operating in the Southwest.

“Although there are signs of a global contraction, the coronavirus will have played out by [this time next year],” says the president of a global tech company headquartered in the Northeast who remains unphased by all recent news, adding that “trade disputes are also resolved to a reasonable degree.”

“One year from now, the U.S. will be beyond the presidential election, and that alone I expect (and hope) will bring stability to an unstable environment as exists now,” says the owner of a small professional services firm. “This will bring stability to U.S. (and global) financial markets.” He rates his outlook an 8 out of 10 for that reason, up from a 5 when looking at current conditions.

“Coronavirus will prove to be a flash in the pan,” agrees the CEO of a small manufacturing company who says neither the coronavirus nor the market correction has had an impact on his outlook for the months ahead. Rather, he, like several other CEOs, says the outcome of the presidential election is more of an impactful factor to monitor.

The chair of a large wholesale distribution company agrees: “Hysteria over C-Virus is overblown. Election is more of a concern,” he says adding that although the stock market correction is unsubstantiated, it will likely remain in a correction/slowdown at least until we know who will take the White House for the next four years.

Overall, 59 percent of polled CEOs say the presidential election could, indeed, have a “severe” or “major” impact on their forecast—although most say they trust this too will have resolved favorably by this time next year.

“The coronavirus epidemic will be over, and election resolved,” says Bob Green, president and creative director for The Verdi Group, when asked to explain his rating of 8 out of 10 when looking at how the next 12 months will unfold.

John Zenger, CEO of Zenger Folkman, an international leadership development firm, says in the aftermath of the presidential election, “businesses will be reassured that there won’t be huge surprises, trade wars, discord. COVID-19 will have been absorbed by that time.”

Numerous CEOs shared similar views as reasons why they continue to view the business landscape 12 months from now as “very good.” Chief Executive’s leading indicator has been on an upward trend since the beginning of the year (up 4 percent) and is now at its highest point since Q3 2018.

Where CEOs are divided is over the Fed’s decision to cut interest rates by another half point in March: 37 percent say they are in favor of the policy, 43 percent against, and 20 percent have no preference. Those against say the cut is feeding worry among the population and takes away a tool for reacting effectively to inflation and a possible recession.

Against this backdrop, a greater proportion of CEOs now expect revenues and profits to decrease over the coming year—compared to the month prior (19 percent vs. 15 percent).

The situation is also causing business leaders to put hiring plans on hold, with 42 percent saying they are not planning on making any change over the coming months—compared to 48 percent last month who said they were forecasting adding to their workforce in 2020.

We observe a similar pullback with respect to capital expenditures, with 38 percent expecting to maintain the status quo through the coming year vs. 51 percent who, in February, anticipated increasing capex over the same time period.

When asked if the current challenges will affect their pricing strategy, 7 out of 10 said it would not, while 15 percent predicted they would increase pricing, albeit by less than 5 percent.

Slicing Down the Data

Looking at the data by industry, it is not all surprising to see that pharma is the sector where confidence was most affected by the latest events, down 9 percent since February—when the sector ranked as most optimistic in the future. While it has not yet fully clawed back the gains it made last month, CEOs now say the adverse impact of coronavirus has included the suspension of other clinical trials, delayed supply chain and postponed business travel, all of which are impacting their outlook.

Consumer manufacturing is also among the hardest hit this month, down 7 percent, and CEOs say they are experiencing lagging consumer demand, as well as lower tourism and entertainment spend due to the coronavirus.

On the upside, an increase in confidence of 20 percent in the government/non-profit space is being credited, by polled CEOs, to stable demand—although some say this may change after the election.

Of the sectors that show an increase in forward-looking confidence, CEOs say low unemployment and interest rates, improving housing market and increasing wages are supporting many leaders’ outlook, while one tech CEO says, “business is booming nationwide.”

Across all sectors, though, there is a common thread and that is that all can change depending on who wins the November election.


Once again this month, the largest companies (by annual revenues) remain the most optimistic. Polled CEOs at companies with more than $1 billion in revenue say they’re looking at fundamentals as an indicator of things to come and are reporting solid demand and strong consumer confidence.

Only mid-market company CEOs are showing decreased confidence this month, due, they say, to mounting uncertainty in economic and political matters. Most, however, say orders are up and business is good—a sentiment echoed by their smaller counterparts, who say low interest rates are an additional bonus in this environment.

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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