Since 2003, the Vistage CEO Confidence Index has provided a quarterly comprehensive report of the opinions and projections of more than 1,400 CEOs of small- to mid-sized companies about the economy, their hiring and investment plans, and prospects for their revenues and profitability.
The Vistage CEO Confidence Index has been a proven predictor of GDP, two quarters in advance.
U.S. small and mid-sized businesses represent the most vital component of the nation’s economy. This sector creates 75% of all new jobs and generates 50% of all national revenue. The opinions of these business leaders provide a clear snapshot of current economic, market and industry trends and demonstrate their plans for growth over the next 12 months. These CEO and leadership insights provide a leading indicator for employment, capital expenditure, sales, and revenue and profit trends.1
Vistage Survey Highlights from CEOs that Run Businesses in our Local Tri-State (NY-NJ-CT) Area
- 39% of CEOs expect the economy to improve in the year ahead (vs. 38% nationally)
- 54% of CEOs plan to expand their workforce in the next year (vs. 61% nationally)
- 51% of CEOs expect to increase investments in the year ahead (vs. 48% nationally)
- 54%of CEOs thought the national economy had improved in the past year (vs. 55% nationally)
- 70%of CEOs expect to increase revenue in the year ahead (vs. 73% nationally)
- 55%of CEOs expect rising profits in the year ahead (vs. 60% nationally)
If projections play out as predicted, the future looks bright for CEOs running businesses in the (NY-NJ-CT) area.2
Get the full report for the NY Tri-State Area here.
National Level Analysis Provided by Dr. Richard Curtin, University of Michigan
CEOs of small business firms report renewed weakness in their outlook for the national economy in the midst of a tightening labor market. Firms expressed increased uncertainty about the ability of President Trump to advance his economic agenda, however this has thus far only had a limited impact on overall confidence. Indeed, firms remain quite confident, expressing more positive expectations than they did a year ago for revenues, profits, investment spending and expanding their workforce. CEOs reported greater difficulty and higher costs for hiring qualified workers, as well as greater hedging of potential risks in their planned investment spending. While these reactions are typical in long expansions — the expansion is celebrating its eighth year in June — business expectations are now more dependent on political rather than economic uncertainties.
Wavering pace of economic growth. Among all CEOs, 55 percent reported that the economy had recently improved, slightly below last quarter’s 59 percent but more than twice last year’s 21 percent. Unfortunately, many fewer firms expected those gains to continue in the year ahead. When asked about future economic prospects, just 38 percent expected continued improvement, down from 57 percent last quarter and 58 percent in late 2016 after Trump’s election. While renewed economic growth was still anticipated by nearly twice the 20 percent recorded in last year’s second quarter, the recent sharp drop in favorable expectations for the economy is still a top concern. When asked about the impact of uncertainty about future economic policies, just over one-third of all firms cited some impact — delayed investment (16 percent), delayed hiring (10 percent) or reduced orders from customers (9 percent) — while the majority 58 percent cited no impact from policy uncertainty.
Tight labor market. Six in ten firms planned to expand their workforce in the second quarter of 2017, and these robust plans have remained unchanged from the prior two quarters. By far the biggest challenge for small firms was the tight labor market, with 62 percent indicating that they were having trouble finding and hiring workers. The most common responses to this challenge was to offer higher wages (34 percent) or added benefits (13 percent). A second common strategy was to increase training (28 percent) of new hires so that on-the-job instructions could replace more skill and more expensive hires. Some firms favored slowing the pace of growth in their workforce (9 percent). Overall, one in five firms reported their top challenge was finding, hiring, training and retaining management talent.
Strong investment spending. Increased investments in plant and equipment were planned by 48 percent of all firms in the 2nd quarter, just above the 47 percent in the prior two quarters and barely below the decade peak of 49 percent set in the closing quarter of 2014. Although firms have revised downward the extent of near term growth, the robust data on investment spending suggests that firms still hold a favorable long-term outlook.
Revenues and profits ease off records. Revenue gains were expected by 73 percent of firms, down from 77 percent last quarter and 78 percent two quarters ago — the most positive revenue expectation in the past ten years. Rising profits were expected 60 percent of all firms, down from 64 percent in the prior two quarters — the highest proportion recorded since the start of 2006. Despite the small recent declines in expected revenues and profits, they remain at quite favorable levels.
Trends in the Vistage Confidence Index show a close correspondence with year-to-year changes in real GDP, published by the U. S. Bureau of Economic Analysis. The Confidence Index has about a six month lead and currently indicates a continued expansion with an uptick in the average rate of GDP growth during 2017. Trends in the Vistage Index of Employment Expectations have a close correspondence with year-to-year changes in total employment, published by the Bureau of Labor Statistics. The Employment Expectations Index has a six to nine month lead on actual changes in the employment series and indicates continued employment gains in 2017.
National level analysis provided by Dr. Richard Curtin, University of Michigan2
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2Vistage Q2 2017 CEO Confidence Index: Tri-State (NY-NJ-CT) Area