Vistage International Inc., a San Diego-based CEO peer advisory organization, released a report that CEO optimism is dropping.
The Vistage CEO Confidence Index was 87.0 in the fourth quarter of 2012 – significantly lower than the 98.8 index score posted in the fourth quarter in 2011. About 1,600 respondents were surveyed for the report in December.
The organization found that CEOs reported a slowdown in the pace of economic growth, and believed that economic conditions would remain stagnant in the first half of 2013.
About half of the CEOs cited economic and political uncertainties as the most significant business issues they are now facing. Approximately one in four firms reported that fiscal cliff uncertainties continued gridlock and caused them to reduce investments and the number of new hires.
“The inability of Washington's political leaders to work together will only fuel continued uncertainty,” said Vistage CEO Rafael Pastor in a prepared statement. “Yet again, small business leaders are left to wonder if they’ll receive any longer-term certainty from the president and the Congress about the key factors that help drive increased consumer spending, investment, productivity, and job growth."
About two-thirds of respondents anticipated revenue growth in 2013. And despite a minor economic rebound for the second half of 2012, 35 percent of firms reported improving conditions as opposed to 60 percent at the start of 2012. Overall, 30 percent expected a weaker economy in 2013 and 26 percent expected economic growth.
Planned payroll additions dropped to 45 percent in the fourth quarter of 2012, down from 55 percent in the same time frame in the prior year. Most expect to retain their employees – only 11 percent planned downsizing.
There was a decline in planning for new investments in plants and equipment. About 20 percent decided to reduce spending in the fourth quarter – the highest level since mid-2009.
--SDBJ Staff Report