Optimism Grows
Analysis of the latest survey of CEOs conducted by Vistage has found that overall optimism of small and midsize business leaders has regained some of the losses recorded mid-year. The Q4 2019 Vistage CEO Confidence Index was 91.5, up 7.7% from the prior quarter and nearly equal to 91.6 recorded in Q1 2019. While the Index is still below the 95.4 recorded in Q4 2018 and the recent peak of 110.3 at the close of 2017, this is the first gain after seven consecutive quarters of declines and a recent low recorded last quarter. The survey was conducted December 2-9, 2019 and included input from 1,604 CEOs from small and midsize businesses.
Looking deeper into the factors that comprise the Index, there is evidence that the pace of the slowdown is decelerating. The majority (63%) of business leaders still plan to hire in the year ahead, over two-thirds (67%) anticipate increased revenues, and more than half (57%) expect increased profits. While just 16% expect improved overall conditions, this is the highest expectation of improvement among surveyed CEOs since Q3 2018.
Positive News on Tariffs
“The positive news on tariffs – announced just after the survey concluded – will help to brighten the outlook for firms as tariffs were identified by 37% of CEOs as having a negative impact on their business,” said Dr. Richard Curtin, a researcher from the University of Michigan who analyzed the survey results. “The anticipation of slower economic growth had tempered revenue and profit expectations as well as planned expansions in fixed investments and employment. Those declines were marginal in 2019, and the latest data regained a good bit of the mid-year losses. Needless to say, the economy is heading into an extraordinary year that will start with a Senate impeachment trial and end with an election that will determine the future of a record expansion in federal spending as well as tax policy.”
While this rebound is small, it points toward the expectation that the expansion will continue during 2020, even if at a slower pace.