The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council declined slightly to 42 in Q2 2023, down from 43 in the first quarter of the year. The Measure is still below a reading of 50, which suggests CEOs remain largely pessimistic about what’s ahead in the economy. (A reading below 50 reflects more negative than positive responses.) A total of 139 CEOs participated in the Q2 survey, which was fielded from April 10 through 24.
CEOs are still pessimistic about the downturn to come. Similar to last quarter, 93% of CEOs still report they are preparing for a US recession over the next 12–18 months. Indeed, 87% believe the recession will be brief and shallow with limited global spillovers and 6% expect a deep US recession.
“After improving sharply to start the year, CEO confidence ticked down slightly in Q2 and remains firmly in negative territory,” said Dana M. Peterson, Chief Economist of The Conference Board. “CEOs’ view of current economic conditions continued to be negative, with 55% of CEOs still reporting general economic conditions are worse than they were six months ago. Meanwhile, future expectations deteriorated in Q2: 56% of CEOs expect general economic conditions to worsen over the next six months, while 40% expect worse conditions in their own industry—up from 48% and 33%, respectively, in Q1.”
“The more things change, the more they stayed the same for CEOs in Q2,” said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. “Even as dramatic bank failures stoked fears of systemic breakdown, CEOs remain nearly unanimous in expecting a short and shallow US recession ahead, with just 6% preparing for a deeper downturn with major global spillovers. At the same time, CEO confidence remains appreciably higher than the depths seen last year. Meanwhile, leaders are acting to insulate themselves from the turmoil in US and EU banks: 62% of CEOs are examining their firms’ banking relationships, and large numbers are also reviewing their firms’ risk management practices and liquidity adequacy—as well as those of customers and suppliers.”
Current Conditions
CEOs’ assessment of general economic conditions was slightly better in Q2:
CEOs were slightly less optimistic about conditions in their own industries to start Q2:
Future Conditions
CEOs’ expectations about the short-term economic outlook pulled back in Q2:
CEOs’ expectations regarding short-term prospects in their own industries also deteriorated slightly:
Employment, Recruiting, Wages, and Capital Spending
US Recession Outlook:
A vast—and still growing—consensus of CEOs is continuing to prepare for a brief and shallow US recession, with limited global spillover, over the next 12-18 months.
Bank Challenges:
A majority of firms are examining their banking relationships in light of the current US and EU banking sector turmoil as well as focusing on risk and adequacy of liquidity.
Federal Funds Rate:
Most CEOs expect the Fed’s target rate to remain high or rise further in 2023.
Top Economic Factors for Monetary Policy:
CEOs continue to view inflation as by far the most important factor influencing monetary policy in 2023, followed by labor market tightness and the risk of further turmoil in the banking sector.
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.tcb.org
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
The next release is Thursday, August 3 at 6 AM ET.
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