Confidence reports continue to actually inspire confidence


We believe the Ben Franklin was right, and chose to adhere to a generally pessimistic demeanor if only because optimists are never pleasantly surprised. However, we’ve seen a lot of confidence temperature readings lately, and the latest CEO report from the highly respected research firm Conference Board was absolutely soaring – and it was based not only on future assessments, but what they are seeing right now.

The CB report is done on a quarterly basis, with the score of 50 indicating par – an assessment that conditions are neither particularly favorable nor unfavorable. In fact, the baseline Conference Board Measure of CEO Confidence™ stood right there at 50 in the Q3 2010 survey.

It has jumped a full 12 points to 62 for Q4 2010.

CB’s Lynn Franco commented, “The bounce back in CEO confidence signals that the cloud of pessimism that prevailed in the third quarter has lifted and CEOs are once again optimistic. The improvement in both current and future conditions suggests a strong finish to 2010 and continued growth in the first half of 2011.”

The reading on current conditions was vastly improved. In Q3, only 32% of CEOs noticed any improvement over the prior six months; in Q4, that ratio was up to 56%. When answering the same question for their own line of business specifically, the improvement was slightly diminished but impressive nevertheless, going from 38% to 55%.

Another huge pole vault came in short-term prospects assessment. In Q3, only 22% expected improvement within six months. That number is now 2.5 times higher, all the way up to 56%. When self-assessing within industry, the numbers are again diminished but still impressive, rising from 28% to 51%.

RBR-TVBR observation: We often see consumers and CEOs out of sync on these types of reports, especially during times of uncertainty, since the two groups experience the economy – and study it – it completely different ways. The fact that both groups are increasing moving toward a sunny disposition is not definitive, and many of the numbers remain less than robust, but overall it is a sign that spending may start to pick up, which will fuel investment and hiring, which will fuel spending, etc. In short, the cycle which has been vicious since the fall of 2008 will morph into a beneficial cycle. Let us all cross our fingers and hope that is what is happening.