The Chief Executive’s CEO Confidence Index, which surveys over 220 United States CEOs, reflected an overall decline in confidence across the business community. It’s the lowest confidence level since November 2012 and follows the increase in optimism following the US presidential election.
How the Survey Works
The survey uses a simple scale, where 1 is poor, and 10 is excellent. The CEOs polled rated January’s business conditions as optimistic 5 out of 10—a decline of 20%. According to the survey, only 39% of participants felt that conditions would improve this year. In the coming months, 48% anticipate a slowdown at the least and a recession at the worst.
A Core Area of Concern
Political uncertainty is central to this poor outlook, primarily centered on the repeated threat of tariffs against key trade partners. This factor creates significant concerns, including government layoffs, uncertain policies, and destabilized trade alliances.
Only 10% of respondents anticipate any positive effect from the proposed tariff policies, while 76% are bracing for short-term or lasting adverse effects.
“[I am] deeply concerned about the impact of tariffs and other disruptions to traditional global supply chains and trade alliances,” one CEO said.
The poll also revealed that 56% of CEOs feel that the current administration’s actions have led to decreased optimism about their businesses’ potential for growth. Similarly, 62% think US companies will struggle to do business outside the country—51% believe this will hurt the nation’s financial future.
Many CEOs who responded expressed disappointment in the administration’s lack of clarity. The election was promised to bring newfound insight into the future of the American economy, but such resources have not been provided. Even CEOs with a positive outlook on the administration feel that specific policies are misguided.
“[The administration] is off to a great start,” said president and CEO of Dollamur Sport Surfaces Don Ochsenreiter, “so it’s disappointing to see [its] ‘dumb’ (as the WSJ said) tariff policy muddying the waters of where the US and world economies are headed.”
Anticipating Inflation and Decreased Profits
Surveyed CEOs also expect an increase in inflation and the cost of goods and services, with only 23% being optimistic. Though companies would raise prices to make up for the problem (64% of CEOs say that they have plans to or have already raised prices this year), only 44% of CEOs who responded expected their business’ profits to increase—that’s compared to their predicted consensus of 76%.
The rate at which CEOs plan to increase the price of goods and services varies, but only 14% of those polled expressed that they plan to keep prices unchanged. Only 3% want to decrease their prices. These leaders report receiving price increases from their associated suppliers and vendors, with 63% of CEOs citing this change as a reason for raising their prices.
An Uncertain Economic Outlook
If the opinion of most CEOs in this poll is accurate, the economy is headed for some level of decline. The current administration’s future policies and the extent to which the price of goods and services will increase are uncertain.
