For further information: Lynn Franco, The Conference Board, (212) 339-0344
For Release Wednesday, October 21, 1998 at 6:30 P.M. ET Release #4448A
CEO CONFIDENCE PLUMMETS TO LOWEST LEVEL IN MORE THAN SEVEN YEARS
Chief executives' confidence in the nation's economy plummeted to its lowest reading in more than seven years in the third quarter of 1998, The Conference Board reports today.
The Conference Board's Measure of Business Confidence in the third quarter of 1998 fell 8 points to a reading of 41 (A reading of more than 50 points reflects more positive than negative responses).
Business leaders' feelings about current economic conditions are considerably less favorable than in the second quarter of 1998. Approximately 47% of CEOs believe economic conditions are worse than they were six months ago, up dramatically from last quarter's reading of 17%. Only 12% of survey participants hold the opposite view, down from 26% in the prior survey.
The measure of business confidence is based on quarterly surveys of more than 150 chief executives and other business leaders representing a wide variety of U.S. industries.
"Chief executives are less optimistic now about the current state of the economy than they have been since the beginning of the decade," says Lynn Franco, associate director of The Conference Board's Consumer Research Center. "Their outlook for the next six months is even more bleak."
The majority of CEOs, 51%, anticipate a worsening in the economy during the next six months. This figure increased from 34% in the second quarter. Only 12% of chief executives think the economy will improve in the coming months, down from 15% in the last survey. Those expecting conditions in their own industries to worsen during the next six months increased from about 26% to 39%. The proportion of CEOs expecting conditions to improve went down from 22% to 17%.
CAPITAL SPENDING PLANS: CUTBACKS GREATER IN 1998 THAN LAST YEAR
Approximately 23% of CEOs report an increase in their companies' capital spending plans since January of this year; 19% scaled plans back. The remaining 58% say their capital spending will not change much. In the 1997 third quarter survey, 28% of business leaders increased their capital spending plans and 12% made cuts. An increase in sales volume was the reason most cited for increasing capital investment plans. A decrease in sales volume was the most cited cause for a decrease in spending plans.
Source: Business Executives' Expectations, Third Quarter 1998, The Conference Board
RSS