Shaky Confidence: CEO Confidence Unsteady on Economic Prospects

Business leaders are only slightly more hopeful about the economy than they were earlier in the year.

According to The Conference Board's Measure of CEO Confidence, executives who rate the current economy favorably rose to 39 points in the second quarter of 2008, a slight rise from 38 in the first quarter. A score above 50 indicates that a majority of CEOs view the economy positively.

The last time the measure fell below 38 was in the final quarter of 2000 when it was at 31 points.

"CEOs continue to rate current economic conditions as unfavorable, and their short-term expectations suggest this slow growth environment will exist for the remainder of the year," says Lynn Franco, director of The Conference Board Consumer Research Center.

Current economic conditions barely registered an improvement for CEOs, with less than 7 percent stating economic conditions had improved, compared to 3 percent last quarter. In assessing their own industries, business leaders were more pessimistic. Approximately 9 percent claim conditions are better—a decline from 14 percent in the first quarter.

Currently, 24 percent of business leaders expect economic conditions to improve in the next six months, up from approximately 20 percent last quarter. Expectations for their own industries, however, did not improve. Only 20 percent of CEOs anticipate an improvement in the months ahead, down from 23 percent last quarter.

Regarding profit expectations during the next 12 months, 60 percent of executives anticipate increases. Executives engaged in the durable goods industry are the most optimistic, with 73 percent expecting profits to increase. Executives in the nondurable goods industry are second, with 56 percent anticipating a rise in profits.