CEO confidence climbs in 2nd quarter, with 70% expecting economic improvement by 2021
- The Confidence Board's Measure of CEO Confidence jumped to 44 in the second quarter from 34 as optimism for the second half of the year outweighed near-term struggles.
- One in 10 CEOs surveyed views current conditions as having improved over the past six months, up from just 5% last quarter.
- However, the share of chief executives expecting overall economic conditions to improve in the next six months leaped to 71% from 50%. Only 16% of respondents see the economy slumping further by 2021.
- "It comes as no surprise that CEOs feel grim about the current lay of the land," Lynn Franco, senior director of economic indicators at The Conference Board, said, adding that the improvements to economic and industry expectations are "encouraging."
A popular gauge of CEO confidence gained in the second quarter as chief executives held out hope for economic recovery through 2020.
The Conference Board's Measure of CEO Confidence jumped to 44 over the three-month period, from 34 in the first quarter, according to a Thursday release. A reading above 50 indicates an overall positive outlook.
Little of the metric's improvement came from present-day outlooks. Only 10% of chief executives see conditions as having improved over the past six months, revealing continued stress around the coronavirus pandemic and its long-term fallout. The share of CEOs saying conditions were worse in their industries fell 10 percentage points to 82%.
Global growth expectations were slightly more optimistic, with CEOs growing more hopeful for recoveries in China, Japan, and India.
"Amid historic unemployment, business growth challenges, a weak economic environment, and a pandemic that persists, it comes as no surprise that CEOs feel grim about the current lay of the land," Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.
The near-term pessimism was largely outweighed by growing optimism for the second half of 2020. The share of chief executives expecting overall economic conditions to improve in the next six months leaped to 71% from 50%. Only 16% expect the economy to worsen by 2021, down from 44% in the prior quarter. Similarly, 70% of CEOs expect improvement in their respective industries, up from 49% last quarter.
The gains in forward-looking indicators are "encouraging" and point to economic recovery across a range of industries, Franco said. Still, there are no indications the revived confidence "will translate to a pickup in investment," she cautioned.