CEOs grow bearish

July 12, 2007
A second-quarter survey of top business leaders indicates decreased optimism about the nation’s short-term economic outlook as well as company profits

A second-quarter survey of top business leaders indicates decreased optimism about the nation’s short-term economic outlook as well as company profits.

The Conference Board’s “Measure of CEO Confidence” dropped to 45-- down from 53 during the first quarter of the year. Numbers over 50 reflect more positive than negative responses.

“Several quarters of sluggish economic growth have taken a toll on CEOs’ confidence, erasing two quarters of improvement,” said Lynn Franco, director of the Board’s Consumer Research Center. “Looking ahead, CEOs do not expect a significant turnaround in conditions and profit expectations. Only a quarter expect profits to increase vs. three-quarters last year.”

While pessimism about current economic conditions stayed about the same –- 23% say the current environment is better, compared to 24% last quarter – pessimism about their respective industries was more pronounced. Only 23% believe conditions are better, down from 37% last quarter.

The CEOs surveyed were also more pessimistic about the economy’s short-term outlook, with only 17% expecting conditions to improve in the next six months, down from 27% last quarter. Expectations about individual industries took an even bigger dive, with only 17% of those surveyed anticipating improvement in their industry, down from 35% during the first quarter.

As far as profits are concerned, only 22% of business leaders expect them to increase over the next 12 months, with CEOs in the non-durable goods industry more optimistic than those in other sectors.

The Conference Board, based in Manhattan, produces The Consumer Confidence Index and the Leading Economic Indicators for the U.S. and other countries. It is a non-profit, non-partisan business membership and research organization.

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