[Paleopsych] BIG DROP IN CEO CONFIDENCE
shovland at mindspring.com
Sun Oct 17 22:43:32 UTC 2004
Still, Executive Outlook Remains Optimistic.
Poll Finds Market Fundamentals, Not Politics, Affect Hiring.
MONTVALE, N.J... The Chief Executive CEO Confidence Index dropped 10 full
points this month, settling in at 159.7 from a high of 177.4 two months
ago. This drop was the second biggest in the history of the Index, only
outdone by the 11.2 drop in February, 2003, right before the start of the
In the wake of a sluggish stock market and rising energy prices, executive
confidence dropped for the second month in a row. Back in July, the Index
dropped 7.7 points. However, executives are still optimistic about business
fundamentals like employment, capital spending, and overall business
conditions. 89.5% of CEO's said current business conditions were normal or
good, compared to only 33.4% optimism back in the spring of 2003.
Similarly, 80.2% of CEO's felt that employment conditions were normal or
good, compared to 36.8% back in spring, 2003, too.
In light of the blossoming political season, this month Chief Executive
Magazine conducted additional polling to better understand the issue of job
creation. From the poll, CEO's do not support the tenet that political
officeholders fuel job growth. The three most agreed upon reasons affecting
job growth, according to 324 CEO's polled this past month, are expected
sales growth (22%), expected profitability (16.8%), and outlook for the
economy in general (13.7%). These market fundamentals completely dwarf the
bottom two reasons CEO's listed as affecting job growth. Those reasons are
uncertainty about the presidential election (4.3%) and outsourcing (4.6%).
"CEO's clearly believe that company fundamentals determine job growth, not
which candidate wins the November election or how many jobs are
outsourced," says Edward M. Kopko, chairman and CEO of the Chief Executive
Group. "Of ten possible reasons, market-related fundamentals were the top
three reasons CEO's listed as affecting job growth, and political issues
were the bottom two. The message from CEO's couldn't be more clear on this
The fact that CEO's explain job growth by the workings of the market is
reinforced by the fact that executive confidence in employment has been
increasing over the past year. This has translated into the recently
reported lows in unemployment rates.
"Although recent months have caused some uncertainty for CEO's, resulting
in the second biggest drop in the history of the CEO Confidence Index,
their optimistic outlook seems to be the real headline," says William J.
Holstein, editor-in-chief of Chief Executive magazine. "Their overwhelming
faith in current employment and business conditions, as well as their faith
in future employment and capital spending conditions really speaks to this
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