Confidence among chief executive officers regarding the United States economy experienced a significant decline in the second quarter, driven by escalating concerns over supply chains and energy costs. The Conference Board's Measure of CEO Confidence dropped to 47 from 59 in the first three months of the year, according to results published Thursday. Readings below 50 indicate that negative responses outnumber positive ones.
Sharp Deterioration in Economic Outlook
Nearly half of the survey respondents reported that economic conditions had worsened, a dramatic increase from the eight percent who expressed that view in the first quarter. Furthermore, 40 percent of CEOs anticipate that the business climate will deteriorate over the next six months, up sharply from 13 percent in the previous survey. The survey, conducted from May 4 to May 18, included 141 CEOs and was released in collaboration with the Business Council.
CEOs Remain Committed to Capital Spending
Despite the pessimistic outlook, CEOs are not reducing their capital spending plans. Approximately 37 percent of respondents expect to increase capital outlays, a larger share than in the first quarter. This indicates that while short-term sentiment has soured, long-term investment strategies remain intact.
Labor Market Stays in ‘Low-Hire, Low-Fire’ Mode
The labor market continues to exhibit a 'low-hire, low-fire' pattern. The proportion of CEOs planning to expand their workforce over the next 12 months edged down, while those anticipating job cuts rose slightly, according to Roger Ferguson, vice chairman of the Business Council and chair emeritus of the Conference Board.
Expert Commentary
“CEOs reported that the economy is materially worse now than it was six months ago and expected economic conditions to weaken further over the next six months,” said Dana Peterson, chief economist at the Conference Board, in a statement. The findings underscore growing unease about the trajectory of the U.S. economy amid persistent supply chain disruptions and energy market volatility.
