Is the Media Making Business Conditions Worse? CEO Confidence at Highest Level in 7 Months

Some CEOs are ringing in 2012 with a greater sense of optimism, while some remain hesitant.

The CEO Confidence index rose to 5.78 out of a possible 10, the highest the index has been in 7 months.  May 2011 was the last time that confidence levels were so high.  In January, 56.3 percent of CEOs said they expect overall business conditions to be ‘good’ or better over the next 12 months. Another 25 percent of CEOs, however, ranked overall business somewhere between ‘good’ and ‘weak.’

For some, business conditions are slowly improving while others are looking to the November election with hope for a new political climate.

The desire for a change in Washington has become a long-standing theme in the CEO Confidence Index.  CEOs are frustrated with political leadership and regulations. Here are a couple of CEO comments stating just that:

• “It’s imperative that we have a change in the President and in Congress, especially the Senate. I have a hard time understanding how a supposed smart President can’t see where the track we’re on is headed when Europe is farther along that track and in deep trouble.”
• “The regulatory climate is hostile and not conducive to a balanced approach to business needs and regulatory agency obligations. No oversight over regulatory bodies leads to uneven enforcement, or worse, operating in the dark.”

More than one CEO commented that business conditions seem to be better than the media is playing them out to be:

• “I believe the media tends to overplay the negative and underplay some of the positive movements in our economy. Consumers are spending again; employment is growing, albeit not robustly, but consistently. The real estate market has clearly moved off its bottom and is trending upward. I’m personally very optimistic about 2012.”
• Another CEO said, ” We are seeing a common thread of moderate growth in the basic material businesses that we supply equipment to. Although we saw a 20 percent drop in revenue 3 years ago, every year since has been better than the last. We have been able to give merit increases to our employees and also pay out performance bonuses. If the media did not keep telling everyone how bad the economy was, people would eventually realize that things are not bad.”

CEO Confidence Index — December 2011

Respondents: 343

What do you expect overall business conditions to be like one year from now on a 1 -10 scale? (10 = Excellent)

What is your assessment of current overall business conditions on a 1-10 scale? (10 = Excellent)

Over the next 12 months, what changes do you forecast for your firm compared to the past 12 months?