Conference Board Finds Steep Drop in CEO Confidence

The confidence of CEOs declined in the second half of 2007, the lowest it’s been since the turn of the century, according to the Conference Board’s Measure of CEO Confidence.

The confidence level of chief executives’ dropped 44 percent in the third quarter and 39 percent in the fourth (a reading of more than 50 points reflects more positive than negative responses). The last time the measure fell below 40 was in the final quarter of 2000, when it dropped to 31.

“CEOs’ confidence in the state of the U.S. economy continues to wither and is now at a seven-year low,” said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement. “Given continued trouble in the housing and credit markets, persistent volatility in financial markets and increases in energy prices, it’s not surprising that confidence has eroded. Looking ahead, the majority of business leaders expect these lackluster economic conditions to prevail throughout the first half of 2008.”

CEOs’ assessments of current economic conditions were considerably less positive, with just 7 percent of CEOs – down from 14 percent last quarter – stating economic conditions had improved. In looking at their own industries, businesses leaders were also less optimistic. About 15 percent claim conditions are better, down from 17 percent in the third quarter.

Moreover, the outlook for six months out has also turned negative. Presently, about 16 percent of business leaders expect conditions in the economy to improve in that time, a drop from 20 percent last quarter. And only 17 percent are anticipating an improvement in their own industries, down from 27 percent last quarter.