CEO Confidence Rises from Five-Year Low

Last quarter's outlook was the lowest since the fourth quarter of 2001.
Stephen TaubJanuary 10, 2007

Chief executive officers are more optimistic about the prospects for the U.S. economy than they were three months ago, according to the latest quarterly survey by the Conference Board.

Though the Conference Board’s index stands at just 50, reflecting a balance between positive and negative responses, that’s better than the 44 from the previous quarter — the first time the index dropped below the midway point since the final quarter of 2001.

The sunnier views of chief executives seem in step with those of the finance chiefs who responded to the latest Duke University/CFO Business Outlook Survey. The finance chiefs expressed tentative optimism for the prospects of both the U.S. economy and their own companies, but they were decidedly more optimistic than in the previous survey, when CFO sentiments hit a five-year low.

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According to the Duke/CFO survey, 30 percent of finance chiefs now say they are more optimistic about the direction of the U.S. economy, and nearly half are more optimistic about future results.

The Conference Board survey, suggests that CEOs have mixed feelings about where the economy is headed:

• 24 percent of survey respondents believe the economic environment has improved, up from 16 percent in the previous quarter
• 23 percent believe conditions have improved in their own industry, down from 28 percent
• 29 percent expect economic conditions to improve in the next six months, up from 16 percent
• 34 percent expect conditions to improve in their own industry, up from 20 percent
• survey respondents expect price increases of about 3.3 percent for the year, slightly down from last year’s estimate of 3.4 percent

The Conference Board surveyed approximately 100 business leaders across a wide range of industries.