The mood is downbeat - Ceo Confidence Index - Brief Article

Chief Executive, The, April, 2003

We are pleased to unveil our CEO Confidence Index. We have been gathering this data from our CEO readers via email since October and now have sufficient data to begin presenting our results.

It's clear that American CEOs felt increasing confidence in overall business conditions late last year. But that confidence fell sharply in January and February, and again in March. The rate of decline slowed in March, but was lower nonetheless.

Current Confidence, which measures how CEOs are feeling about their immediate prospects, is the most volatile component of the overall CEO Index. Future Confidence, another component of the broader index, measures sentiment about business prospects one quarter into the future. It also declined, but not as sharply as Current Confidence.

We don't ask our respondents why they feel the way they do. But it seemed clear that the impending war in Iraq was a major factor in these results. Another was the impact of Sarbanes-Oxley. It's intriguing that the CEOs of privately held companies--who don't have to contend with the new law-were slightly more optimistic than the CEOs of public companies. For full results and for a description of our methodology, go to www.cbiefexecutive.net.

One of the patterns we have detected is the correlation between CEO confidence and the Dow Jones Industrial Average. We used October as the starting point and attached a benchmark value of 100 to the Dow at that point. Late last year, CEOs were more optimistic than the Dow, but that changed in December as CEOs became more downbeat. The lines crossed. So the key question is: Does CEO confidence drive the Dow or does the Dow drive CEO confidence?

For continued insight into the way your fellow CEOs are thinking, watch this space every month. And if you would like to register to take part in this exciting project, enter www.chiefexecutive.net/register on your computer. We'll take care of the rest.

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