Consumers aren’t the only ones going through a crisis of confidence.
The Conference Board, which reported that its Consumer Confidence Index fell to its lowest level ever in December, last week said sentiment about the economy among chief executive officers hit a low point.
The board’s Measure of CEO Confidence tumbled to 24 during the third quarter, down from 40 in the July through September period, posting the lowest reading since its introduction in the second quarter of 1976.
The CEO scale runs from zero to 100, with a reading of more than 50 representing more favorable than unfavorable responses. The fourth-quarter mark was the lowest on record and it marked only the second time that it had fallen to less than 30, the first being the 29 tallied during the second quarter of 1980.
“The erosion in ceo confidence is a reflection of the rapid and severe deterioration in economic conditions experienced in the final months of 2008,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Looking ahead, ceo’s remain extremely pessimistic about overall economic prospects in the first half of 2009.”
The most dramatic component of the decline was the measure of “current economic conditions versus six months ago,” where ceo’s registered a 7, down from 30 in the third quarter. “Current conditions in own industry versus six months ago” also fell precipitously, to 16 from 37 in the previous quarter.
However, expectations, while hardly upbeat, were stronger. “Expectations for economy, six months ahead” registered a 32 and “expectations for own industry, six months ahead” a 34. In the third quarter, the average responses were 46 and 45, respectively.
About 11 percent of executives expect economic conditions to improve in the next six months, down from 20 percent in the third quarter. Even in their own industries, only 12 percent expect short-term improvement, versus 17 percent in the previous survey.
About 100 ceo’s from a wide range of industries are polled for the CEO Confidence survey. Fourth-quarter responses were received between mid-November and mid-December.
Last month, The Conference Board’s Consumer Confidence Index fell to 38, its lowest level ever, as its Present Situation component dropped to 29.4, the lowest level since April 1992.