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Chief Execs Remain Downcast

Cap Ex Budgets Take Hit

The Conference Board Measure of CEO Confidence posted a reading of 40 in the third quarter of 2008, firmly entrenched in the "negative outlook" zone.

The survey includes about 100 business leaders in a wide range of industries, who were polled from mid-August to mid-September, the Conference Board said.

With 50 points being the negative-positive divider line, the latest Measure was virtually unchanged from the reading of 39 in the second quarter.

Lynn Franco, director of The Conference Board Consumer Research Center, noted, "Ceo confidence remains quite negative, and continues to hover at levels associated with recession. While these results do not reflect the full impact of the financial crisis that began in mid-September, there is little doubt that the pessimism expressed before these events will worsen in the near-term."

The gloom is likely to persist, the study showed.

Only about 20% of business leaders expect economic conditions to improve in the next six months, down from approximately 24% last quarter. Expectations for their own industries were also pessimistic: Only 17% of ceos anticipate an improvement in the months ahead, down from 20% last quarter.

One place in corporate budgets this pessimism is making itself felt is capital expenditures — with more than twice the number of ceos saying they have cut rather than expanded their cap ex plans.

About 17% of chief executives report increases in their companies' capital spending plans since January, while 38% have scaled plans back. This is a significant reversal from the 2007 survey, The Conference Board noted, when 24% had increased their capital spending plans and just 13% had made cuts.

A decline in sales volume was the most cited reason for a decrease in spending plans.

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