While the full impact of the economic shutdown occurred in April and May, the latest Vistage CEO Confidence Index data still reveals the devastating effects of the pandemic on small and midsize businesses (SMBs). The Vistage CEO Confidence Index plummeted to 65.5 in Q2 2020; there have only been two other times in the history of the survey that the Index was recorded so low.
While every factor that comprises the Index dropped from last quarter, overwhelmingly the biggest decline was CEO sentiment about current economic conditions in the U.S: 93% of CEOs report that the economy recently worsened. In comparison, just 25% believe that the economy will continue to worsen in the next 12 months which is an indicator that CEOs feel the economic impact has reached the bottom.
As a result of the shutdown, 80% of SMBs reported some level of revenue declines; 17% report declines of 10% or less. Revenue projections are the lowest they have been since the Great Recession; 31% of CEOs expect decreased revenues in the year ahead. However, there is some optimism as 45% expect increased revenues in the year ahead. Looking at monthly data collected from CEOs about expectations for revenues and profits for the year ahead, it is clear that the bottom was reached April, which is not reflected in the quarterly data.
Through the pandemic, 58% of CEOs maintained (47%) or grew (11%) their workforces. Looking ahead, 36% plan to increase their workforces in the next 12 months. The Paycheck Protection Program (PPP) had a part in these plans. Four-in-five CEOs surveyed were funded by the PPP, and of those, 90% expect most (35%) or all (55%) of the loan to be forgiven. With funds still available and applications open through June 30, there is time for the program to have a positive impact on even more small businesses.
Download the Q2 2020 Vistage CEO Confidence Index report to learn more about the sentiment of small and midsize business leaders, including:
Projections about the performance of the U.S. economy
Revenue and profitability expectations
Expansion plans for hiring and investments