CEO Confidence Improves in Q3 | 8.3.23
Pessimism Has Receded, but CEOs Still See Challenges on the Horizon
The Conference Board Measure of #CEOConfidence? in collaboration with The Business Council U.S. improved to 48 in Q3 2023, up from 42 in the second quarter. The Measure was still below a reading of 50, which suggests #CEOs remained cautious about what’s ahead for the economy. (A reading below 50 reflects more negative than positive responses.) A total of 127 CEOs participated in the Q3 survey, which was fielded from July 10 through 24.?
Despite the brighter outlook, most CEOs still anticipated an economic downturn ahead. In Q3, 84% reported that they are preparing for a US #recession over the next 12-18 months, compared to 93% in Q2. That said, the vast majority continued to expect a short and shallow US recession, with just 4% now expecting a deep US with major global spillovers—down from a high of 13% in Q4 2022. Meanwhile, the proportion of CEOs expecting no recession at all climbed steadily from 2% in Q4 2022 to 17% in the latest survey. ?
“The gloom that pervaded among CEOs at the start of 2023 has lessened, but most are still treading carefully,” said Roger W. Ferguson, Jr. , Vice Chairman of The Business Council and Trustee of The Conference Board. “In Q3, just 28% of CEOs reported general #economic conditions to be better than they were six months ago, while 31% of CEOs said they are worse—down sharply from 55% last quarter. Meanwhile, future #expectations improved moderately: only 39% of CEOs in Q3 expected general economic conditions to worsen over the next six months, down from 56% in Q2, while 30% anticipated worse conditions in their own industry, down from 40% in Q2.” ??
“Amid ongoing uncertainty, CEOs are shifting tactics to prepare for a downturn but are still challenged by unusual labor market conditions,” said Dana M Peterson , Chief Economist of The Conference Board. “With recession fears persisting, 63% of CEOs now plan to keep #capitalspending plans unchanged in the year ahead—up from 56% in Q2. That said, just 14% expected to decrease capital spending plans, compared to 22% planning to increase them. Attracting qualified #workers remained difficult for the majority of companies: 74% of CEOs plan to raise wages by more than 3% over the next year. The competition for talent is fierce: 40% of CEOs expect to ramp up hiring in the next 12 months and another 40% are maintaining the size of their workforce—a sign of labor hoarding in an extremely tight labor market.”
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Current Conditions
CEOs’ assessment of general economic conditions were markedly better in Q3:
CEOs were also less pessimistic about conditions in their own industries in Q3:
Future Conditions
CEOs’ expectations about the short-term economic outlook were slightly less bleak in Q3:
CEOs’ expectations regarding short-term prospects in their own industries also improved slightly:
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Employment, Recruiting, Wages, and Capital Spending
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Industry Risks
About half of CEOs cite cyber and geopolitical instability as high risks to their industry
US Recession Outlook
Slightly fewer CEOs anticipate a recession in the US ahead.
Federal Funds Rate:
Most CEOs expect the Fed’s target rate to remain high or rise further in 2023.
US Inflation Factors
Wage growth and consumer demand are expected to have the greatest influence on US inflation.
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About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
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About The Business Council
The Business Council is a forum for the CEOs of the world’s largest multinational corporations across all industry sectors. Members gather several times each year to share best practices, network and engage in intellectually provocative, enlightening discussions with peers and thought-leaders in business, government, academia, science, technology and other disciplines. Through the medium of discussion, the Council seeks to foster greater understanding of the major opportunities and challenges facing business, and to create consensus for solutions. The Business Council is a non-partisan, not-for-profit entity holding 501 (c) (6) tax-exempt status. The Business Council does not lobby. Visit The Business Council’s website at www.thebusinesscouncil.org
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