The August confidence survey of corner office occupants by Chief Executive Magazine registered the biggest one-month drop since they began taking the survey back in 10/02. The overall confidence level slid 24.3%m to 145, which was still five points above the neutral point of 140 under survey methodology. Confidence about current conditions was actually quite high, at 190.8, but it too suffered a 24.7% drop. Both employment confidence (164) and business condition confidence (157) remained solidly positive despite similar drops, but investment confidence (120) and future confidence (114) were in the negative zone. The silver lining, if there is one, is that as a group CEOs felt their own companies were doing just fine. But the credit crisis was the overwhelming source of gloom – 76% said that was the main reason for their loss of confidence. Another 47% cited turmoil in the stock market, but 58% said the financial performance of their own company was cause for optimism.
"While CEOs are worried about the potential long-term impact of hastily offered lines of credit," said Edward M. Kopko, CEO and Publisher of Chief Executive Magazine, "they remain confident in their ability to properly lead their organizations through this turbulent time." One of those surveyed, Jim Scatena, President/CEO of FloraCraft, said, "Business conditions and financial results are much better than the Dow might indicate. The housing slump and sub-prime lending issues are concealing all of the good news. If the Fed were to step in and relax some monetary policies, I think the Dow would see a significant jump and everyone would realize that corporate earnings and employment are in good condition."
RBR/TVBR observation: Unless you’re in the credit or real estate business, the problems those sectors are suffering come under the heading of force majeur. They are random acts over which you have absolutely no control. But you also have to deal with them. In times when money flow is throttled for whatever reason, the tendency for many companies is to cut expenses, and advertising is often among the first to be trimmed. It will be important to remind clients that those who continue to advertise aggressively will be the ones who move up while their competitors attach themselves like barnacles to the sinking part of the economy. If CEOs are bullish on their own performance, remind them of the opportunity available to the bold in hard times.
