The chief executive community seems to be seeing signs that the economy is genuinely turning around, according to one survey; and while said to be considerably more skittish, another study found a significant rebound in consumer confidence as well.
The Conference Board survey of corner office sentiment picked up a third straight increase in optimism, and registered a significant leap in just a month, when Q2’s 55 increased to Q3’s 63. A score of 50 indicates more positive than negative sentiments.
And check out the massive leap in current conditions assessment – it went all the way from 32 to 68.
“CEOs have grown considerably more optimistic in their short-term outlook,” says Conference Board’s Lynn Franco. “Although nearly 60 percent say they’ve scaled back capital spending plans since January, growing optimism over the past several quarters should translate into increased spending in 2010.”
Meanwhile, the latest RBC CASH survey (CASH stands for Consumer Attitudes and Spending by Household) showed an almost 12 point jump from September to October, as overall consumer confidence jumped from 40.0 to 51.8.
“Federal Reserve Chairman Ben Bernanke’s assertion three weeks ago that the recession is over, together with a lack of negative financial news since then, have had a galvanizing effect on consumer sentiment,” said RBC Capital Markets U.S. economist Tom Porcelli. “Although the trends are moving in the right direction, consumer confidence remains fragile, and unexpected bad news about the economy or markets could once again send sentiment spiraling downward.”
RBR-TVBR observation: These surveys, of course, prove nothing and can sometimes turn on a dime. The consumer polls in particular come from people who are not speaking after carefully analyzing all available data, but rather are giving their gut reaction based on their own personal situation. But if a herd mentality develops that things are getting better develops, it is the sort of thing that could generate a benevolent self-fulfilling prophecy.
Note that the CEO confidence level seems to be more stable than that of the consumer. Could that have anything to do with the continued instability in the employment situation? If CEOs would quit laying off consumers, the consumers’ confidence would stabilize and their spending would increase, and that would certainly have a benevolent effect on the economy. Keep that in mind the next time you’re looking at your balance sheets, CEOs.
