Post-election optimism among top executives continued to rise in the first quarter of the year, according to a survey of CEOs by Vistage Worldwide LLC, the San Diego-based executive coaching company, but company leaders in San Diego weren’t quite as bullish as their nationwide counterparts.
The Vistage CEO Confidence Index, 91.4 and 105.2 in the third and fourth quarters of 2016, respectively, rose to 106.9 in the first three months of this year. That’s the highest it has been since the fourth quarter of 2014, when it peaked at 107.5. The index reflects a compilation of responses from more than 2,000 CEOs of small to mid-sized companies.
The executives reported a more favorable outlook for the economy in the first quarter of the year than in the previous quarter.
Respondents from San Diego, however, were a bit more cautious in their optimism.
It is unclear how representative the results of the San Diego-specific data are -- only about 30 respondents to the survey were San Diego-based CEOs -- but of local CEOs who responded, 52 percent said economic conditions in the U.S. were better than a year ago. Among all CEOs, 59 percent said it had improved.
Forty-five percent of San Diego CEOs who responded felt conditions were the same and 3 percent felt they had worsened. That’s compared to 36 percent and 5 percent of all CEOs who answered the Vistage survey.
Among all CEOs who answered, 57 percent said they expect the economy to improve in the next 12 months; of San Diego CEOs, 48 percent felt that way.
When it came to their company, 47 percent said their fixed investment expenditures are likely to increase in the next 12 months and 77 percent said sales revenue is likely to increase. Of San Diego CEOs, 39 percent expected an increase in fixed investment expenditures and 73 percent predicted their sales revenue would rise.
However, San Diego CEOs were more optimistic than CEOs overall about their firms’ future profitability: 70 percent said their profitability would likely increase in the next 12 months, while 64 percent of overall CEO respondents felt that way.
Overall, 60 percent of CEOs said they planned to hire in the next 12 months, 35 percent expected their number of employees to remain unchanged and 5 percent foresaw their workforce shrinking. In San Diego, 52 percent of CEOs who responded expected the number of employees at their firm to increase, 36 percent foresaw no change and 9 percent believed the number of employees at their firm would shrink.
To fuel that growth, a slim majority of CEOs overall, 51 percent, said they were more willing to take on debt today than they were a year ago. In San Diego, 45 percent said they were more willing to do so.
“Although the surge in optimism has thus far only restored confidence to the highs recorded following the Great Recession, the return of optimism to the highs of the past few years has meant that CEOs anticipate favorable trends in their revenues and profits,” said the University of Michigan’s Richard Curtin, who analyzed the responses to Vistage’s survey. “While most firms would like the new administration’s policies implemented as soon as possible, a slower start has not diminished their willingness to increase fixed investment spending and expand their workforce.”