Corporate CEOs are generally a confident lot, predicting good times ahead for their businesses. But raging inflation, continued supply chain disruption and worker shortages have dimmed their enthusiasm
The Conference Board’s CEO Confidence Measure, compiled in collaboration with The Business Council, slid to 57 in the first quarter from 65 in the fourth quarter.
That represents the third straight quarterly decline. The index has dropped from a record high of 82 in last year’s second quarter. To be sure, a reading above 50 points means there are more positive than negative responses. But the trend is ominous.
“CEO confidence fell further to start 2022, as business leaders struggle to contend with inflation, labor shortages, and yet another viral surge,” said Dana Peterson, chief economist of The Conference Board.
“In the midst of omicron’s sudden impact, only one-third of CEOs now report current economic conditions are better than six months ago—down dramatically from over 60% in the fourth quarter.”
Nearly 75% of CEOs said interest rate hikes by the Federal Reserve are unlikely to curb inflation as quickly as the Fed would like, because of continued supply constraints and wage inflation. Consumer prices rose 7.5% in the 12 months through January, a 39-year high.
“CEOs are preparing for supply constraints and wage inflation to persist well into this year and potentially beyond,” said Roger Ferguson, vice chairman of The Business Council.
“While interest-rate hikes should help dampen inflation, few are expecting prices to stabilize rapidly. As a result, a vast majority of CEOs still foresee a need to pass along rising costs to consumers over the next 12 months.”
As for staffing, 83% of CEOs report some problems attracting qualified workers, up from 79% in the fourth quarter.
On the semi-bright side, 50% of CEOs said they expect economic conditions to improve over the next six months, though that’s down from 61% in the fourth quarter.
