Overall confidence among CEOs of small and midsize businesses declined for the 7th consecutive quarter. The Vistage CEO Confidence Index was 85.0 in the 3rd quarter of 2019, down 3.8% from the prior quarter and 17.5% from last year’s 3rd quarter survey.
While the overall decline points toward a slower pace of growth in the economy during the year ahead, the recent falloff does not indicate that CEOs anticipate a recession. The Great Recession falloff from peak-to-trough was a more substantial 58% drop, compared with today’s drop of 23% from the Q4 2017 peak. The current decline, however, is comparable to the early decline recorded prior to the last recession.
There are a number of domestic and international issues whose favorable resolution could push confidence higher in the months ahead. At present, however, uncertainty about how and when these issues will be resolved will continue to erode confidence. Tariffs have damaged firms, with 41% of CEOs reporting that tariffs have negatively impacted their business,
and 33% reporting that their business was affected by the tariffs that took effect at the start of September.
Importantly, while the falloff in evaluations of the national economy has been substantial, only modest declines have been recorded in expected changes in revenues, profits, and planned hiring. Nonetheless, firms have embraced a precautionary outlook, which will make their forward planning more defensive rather than expansive.
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