SOURCE: Chief Executive Magazine

November 01, 2007 07:30 ET

CEO Confidence at the Lowest Since July 2003

Only a Quarter of the CEOs Surveyed Believe a Recession Is Likely

MONTVALE, NJ--(Marketwire - November 1, 2007) - Chief Executive magazine today announced the results of its monthly "CEO Confidence Index," which measures C-suite confidence in various aspects of the economy from hiring to investing to the overall business climate. According to the survey, CEOs confidence continued to decline in October, hitting the lowest level since July 2003, falling two percent to 127.5 points.

This month's polling, conducted among 536 C-level execs between October 8 and 19, highlighted the divergence between the stock market and CEOs' reaction to the Fed's September 18 rate cut.

"We are seeing a growing deviation between CEOs' confidence levels versus the stock market performance," said Edward M. Kopko, CEO and Publisher of Chief Executive Magazine. "The discrepancy is suggestive of a potential correction that may be awaiting the stock market, as CEOs' confidence levels have historically been a lead indicator of how the markets will perform."

Four of the five indices of the CEO Index dropped in October with the Investment Confidence Index recording the biggest plunge, falling seven percent to 112.0 points. The only index that experienced an increase was the Employment Index -- its first increase since July -- rising three percent. However, CEOs are still cautious about future employment, as a third -- 33 percent -- of them expect employment to decrease over the next quarter.

Moreover, the gap between CEOs' current and future confidence remained significantly wide, with Future Confidence Index hovering around 37 percent lower than the Current Confidence Index, suggesting CEOs are wary of the ability of the economy to sustain itself.

"CEOs have been signaling for some time their concerns about the economy and this month's index indicates that these concerns may start to take hold," said Kopko.

Supporting Kopko's comments, Terry L. Stallcup, President and CEO, Ultimate Consulting, Inc. said, "I see our clients being skeptical of the market and being more conservative going into the last quarter."

In additional polling this month, the magazine asked CEOs their thoughts on a possible recession. Twenty-five percent of CEOs indicated that they believed the likelihood of a recession in the next 18 months is greater than 50 percent, while 75 percent said it was less than 50 percent. Meanwhile, 42 percent of the respondents said that the chances of a recession were less than 25 percent.

According to survey respondents, top issues fueling expectations of a recession include the fallout from the sub-prime mortgage shake-up, housing market, rising cost of oil, a weak dollar and the burgeoning national debt.

Commenting on the possibility of a recession, W.R. Price, President and CEO Independent Builders Supply Association, said, "The impact of housing -- compounded with fuel costs at record highs -- and the continued spillover from the sub-prime meltdown has not been fully felt yet. The housing industry is one of the leading economic indicators as far as I am concerned, and unless we can get this 'motor' up and running again soon, I am certain we will see a continued decline in the national economy with joblessness taking the lead."

About the CEO Confidence Index

The CEO Confidence Index, the nation's only monthly CEO index, measures the confidence that CEOs have in the economy as well as their future business plans, and is unique both in its focus and survey base. For additional information regarding the confidence of public- and private-company CEOs, details about regional CEO attitudes on employment, investment and business conditions, as well as confidence differences between service and non-service industry CEOs, visit our full report at http://www.chiefexecutive.net/ceoindex.

About Chief Executive magazine

Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 228,000. Chief Executive Group facilitates "Chief Executive of the Year," a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. Robert Ulrich, A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award's 22-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers. Visit www.chiefexecutive.net for more information.

CEO Index, October 2007

Respondents: 536

                                October 07    Monthly Change

CEO Index                            127.5              (3.0)
Current Confidence Index             163.3              (3.1)
Future Confidence Index              103.3              (2.9)
Business Condition Index             137.3              (3.7)
Invest Confidence Index              112.0              (7.9)
Employment Confidence Index          136.7               4.2

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