“Many of our clients feel the economy is stagnant,” another responded. “Decisions are on hold because of uncertainty of where interest rates are headed and concern over the lack of leadership in the current administration and the inability of Congress to accomplish anything.”
CEO Confidence Index Methodology
Chief Executive surveys CEOs each month to compile our CEO Confidence Index data. As of February 2011, we have enhanced and updated our surveying method to improve our results.
The CEO Confidence Index value is a rating from 1 to 10 of CEOs’ expectations for overall business conditions. As such, it captures an accurate assessment of how confident CEOs are in the economy and prospects for business over the coming year.
In addition to the responses collected for the Confidence Index value, we also ask CEOs to assess current overall business conditions and the prospects for each CEO’s own company over the coming year.
Survey results are released each month on ChiefExecutive.net and covered in each issue of Chief Executive magazine.
Our historical results for the CEO Confidence Index have been normalized to correspond to our updated surveying method.
The questions asked are as follows:
What is your assessment of current business conditions on a 1-10 scale? (10 = Excellent)
What do you expect overall business conditions to be like one year from now on a 1-10 scale?
Over the next 12 months, what changes do you forecast for your firm compared to the past 12 months? (This question is asked for revenue, number of employees, capital expenditures, and profits.)
CEOs are guided by giving them the following word associations to each value:
10 = Excellent
8 = Very Good
6 = Good
4 = Weak
2 = Poor
If you are interested in learning more about the CEO Confidence Index or gaining access to the historical data, please e-mail Chief Executive Research.
From flat interest rates to low oil prices, weak retail sales and the struggle over higher worker pay, many CEOs feel that nothing will improve until after the presidential election and are maintaining an air of cautiousness until then.
“This has to be the most pathetic economic recovery on record,” one CEO commented. “I was around during the 1980s recovery and saw a groundswell of business optimism as government lowered taxes and reduced regulation, and there was a message of optimism and confidence in Free Enterprise coming from the White House. As a result, business leaders then felt they had to get in front of an expanding economy. There is none of that kind of optimism now. Rather, business leaders seem to be in more of a defensive mode than anything else.”
October 2015: CEO Confidence in Overall Future Business Conditions Up Slightly but Expected to Remain Weak Until the Presidential Election
On a scale of 1 to 10 with 10 being the highest, CEOs rated their confidence in overall business conditions one year from now a 6.23, compared with 6.71 in January—a 7.1% drop—when everyone thought the economy was going to bounce back strong.
A significant part of the rating comes from the fact that many CEOs don’t see the economy improving until a new president of the United States takes office.
September 2015 CEO Confidence Index: CEOs Are Angry at Washington; but Their Outlook Depends on Their Industry
Overall, CEOs ranked their confidence in future business 12 months out a 6.08 out of 10. Compared to 6.71 in January 2015, that’s a 9.4% drop.
Top complaints include overburdensome taxes and regulations; a lack of leadership in addressing domestic problems and global instability; and structural industry changes.
“With so many negative balls in the air, who can tell what will happen and, even worse, nobody in Washington is doing anything about it,” says one CEO. Another laments “an administration [that] is clueless about creating an environment which incentivizes business to grow.”
July 2015: CEO Confidence Is Down 5.7% From January
CEOs and the businesses they lead have endured many ups and downs over the last few months, from global economic distress in places like Greece and China, to increasing terrorist concerns worldwide, a strong U.S. dollar, low oil and gas prices, increased healthcare and staffing costs, and more. So it’s not altogether unexpected that CEOs’ confidence is down slightly from the beginning of the year, when prospects for future business were stronger.
June 2015: CEO Confidence Down 2.5% From May
CEOs’ confidence in what they anticipate overall business conditions to be 1 year from now weakened in June as compared to the previous month, making June the lowest month of CEO Confidence all year.