CEO’s Are More Pessimistic About Our Economy

CEOs have become less optimistic about prospects for their firm due to renewed concerns about the outlook for the national economy. The Vistage CEO Confidence Index was 92.8 in the 2nd quarter 2012 survey, down from 105.1 in the 1st quarter of 2012, repeating the same pattern of decline recorded in the first half of 2011 (105.2 in the 1st quarter of 2011 to 92.9 in the 2nd). Indeed, this is the third year that a mid-year slump in confidence has been recorded.

The common elements in each year’s retreat have been weakening conditions in the economy as well as concerns over economic policies. Importantly, the retreat in confidence has been quite small, with the confidence index much closer to its ten-year peak (115.6) than to its low point (48.7). Commenting on the survey results, University of Michigan’s Dr. Richard Curtin said, “Overall, the data indicates that firms expect the economic expansion to continue, with the majority anticipating that their firms will book higher revenues and increased profits during the year ahead. Nonetheless, firms expressed rising uncertainty about what federal tax and spending reforms will be passed to avoid a nose dive off the 2013 fiscal cliff. It’s too close and too uncertain to avoid taking some steps now to protect their firm’s interests.”

  • 30% of CEOs expect overall economic conditions to improve in the next 12 months.
  • 49% believe conditions will remain the same.
  • 66% of CEOs anticipate sales revenues will increase in the next 12 months.
  • 50% of CEOs believe their firm’s number of employees will increase during the next 12 months.
  • 26% of CEOs say customer retention and lead generation are the biggest challenges they are facing right now.
  • 21% say their biggest challenge is managing costs.
  • 15% say its cash, liquidity, receivables.
  • 42% of CEOs said that to reduce the deficit, Washington should increase taxes, cut spending, and reform the entitlement system.
  • 27% said they should cut spending.
  • 23% said they should enact a spending cap that prevents the government from spending more than it collects each year.
  • 31% of CEOs say that to control health care costs, Washington should allow individuals to opt out of the mandated health coverage for their own private coverage.
  • 30% said they should provide incentives to companies to implement health wellness programs.
  • 30% of CEOs said that to address entitlement reform, Washington should increase the age by which one can receive Social Security.
  • 23% said they should allow people to opt out of Social Security to choose their own retirement investments.
  • 23% said they should enact new programs to replace Social Security and entitlement programs.

Bill English, CEO
Mindsharp

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