The latest survey of CEOs conducted by Vistage found that the economic confidence of small and midsize business leaders has continued to decline. In the Q3 2019 survey, the Vistage CEO Confidence Index measured 85.0, down from 88.4 last quarter (Q2 2019) and 103.0 one year ago (Q3 2018). This is the lowest level recorded since Q3 2011, when the Index fell to 83.5. The survey was conducted September 9-16 and included input from 1,518 CEOs from small and midsize firms.
Nearly all of components of the CEO Confidence Index fell in the survey.
The biggest contributor to the Index’s decline was sentiment about the performance of the U.S. economy. Less than one-quarter (21%) of CEOs reported that economic conditions had recently improved, which is a 10-point drop from last quarter (31%) and a 43-point drop from last year (64%). A growing portion of CEOs — 39% this quarter versus 35% last quarter — indicated that they believe the national economy will worsen in the year ahead.
“While the overall decline points toward a slower pace of growth in the economy during the year ahead, the recent falloff does not indicate that CEOs anticipate a recession,” said Dr. Richard Curtin, a researcher from the University of Michigan who analyzed the survey results. “There are a number of domestic and international issues whose favorable resolution could push confidence higher in the months ahead. At present, however, uncertainty about how and when these issues will be resolved will continue to erode confidence.”
A key factor that differentiates today’s economy from the conditions that typically precede a recession is high employment.
With unemployment remaining near a record low, the sole component of the Index that increased from last quarter was workforce expansion. With 57% of CEOs planning to expand their workforce in the next year, this is a sign of confidence amid the caution and uncertainty.