Two confidence surveys, two rays of sunshine


According to Vistage International, CEO confidence surged during the final quarter of 2010, with solid majorities expecting increased revenues and profits in 2011. And another survey from RBC says that consumer confidence is down slightly in January, most say they will be spending at least some of the found money they will get from the temporary cut in Social Security payroll deductions, helping to fuel spending in 2011.

The Vistage Confidence Index made it all the way to 106.3 in Q4 2010, a huge leap over the Q3 level of 95.1. The news is even better when compared to Q1 2010, when the Index stood at 94.4. Vistage says that the Q4 reading is the best it has recorded in five years.

Adding to the positive assessment are numbers like 77% — that’s how many CEOs expect to increase revenue in 2011. Further, 63% expect to increase profit and – here’s a big one – 54% expect to hire more employees.
Vistage International Chairman/CEO Rafael Pastor praised “the commitment and perseverance” of CEOs at small corporations. HE commented, “Nearly half the CEOs surveyed pledged their personal assets to keep their companies running, their people employed, and our economy from collapsing. They are the unsung heroes of our economic recovery and the brighter days ahead.”

Meanwhile, 74% of consumers said they would be spending at least some of the newfound cash that shows up in their paychecks this year, fueling hopes of a spending surge that will help fuel an uptick in the speed of the recovery from the financial collapse that reached critical mass in the fall of 2008. 42% expect to spend all or most of the extra cash, while 26% plan to sock all of it into the bank.

The RBC Consumer Outlook Index, which comes out on a monthly basis, nevertheless was down slightly on the January 2011 report compared to December 2010. However, it was only down slightly to 44.9, and the 45.2 registered the previous month was the best score RBC reported since the onset of the recession.

Employment confidence went the other direction – up slightly – rising from 51.8 in December to 52.1 in January.

“After rising for three straight months, confidence has taken a little breather here in January,” said RBC Capital Markets Chief U.S. economist Tom Porcelli. “But even with the modest pullback, we are still seeing a better backdrop of consumer confidence as we start the New Year. The jobs measure bucked the broader trend and posted a surprising rise – even in the face of weaker overall confidence and an unemployment rate that rose in December.”

RBR-TVBR observation: These types of surveys tend to be all over the map, and often, the opinions of consumers, based mainly on impressions based on general news reporting, are at loggerheads with those of executives, who have access to cold, hard numbers with direct bearing on their confidence level. Seeing cause for optimism from both sectors at once is a good thing. Now let’s watch and see if the confidence is warranted.