Majority Of CEOs Expect Recovery To Continue

Two-thirds of CEOs believe the economy has improved during the past year and have expect more gains in the year ahead, according to a new survey from Vistage International.

The Vistage CEO Confidence Index was 105.2 in the 1st quarter of 2011, slightly below 106.3 recorded in the prior quarter but well above the 93.7 in last year’s 1st quarter survey. CEO confidence has more than doubled since the recession low of 48.7 two years ago.

However, the small decline reflects a renewed uncertainty about the impact of events in Japan and the Middle East on energy costs, consumer spending and inflation. Overall, the majority of CEOs still expect the recovery to continue and their own businesses to continue to grow.

Nearly three-quarters of CEOs said rising gas prices will have an adverse impact on their businesses; 38% are already seeing evidence that these increases are cutting into consumer spending. Nearly half (49%) of the CEOS said they expect their prices for products or services to increase during the next 12 months; only 39% had such an expectation just a quarter ago.

Survey respondents (53%) also said that the top priority for Congress should be lowering the deficit, eclipsing issues such as job creation (22%), tax policy (11%) or reducing federal regulations (10%).

“Uncertainty is the enemy of confidence,” said Rafael Pastor, Chairman of the Board and CEO of Vistage International.

“ While the events taking place around the world have created new uncertainties about energy costs, consumer spending and inflation, it’s remarkable that CEOs remain as optimistic as they are about increasing sales and profits and creating jobs throughout the remainder of the year.”

Current economic conditions had improved according to 63% of all CEOs in the 1st quarter, up from 48% one year ago and just 2% two years ago. Only 5% thought that the economy had worsened – the lowest percentage in six years.

When asked about prospects for the year ahead, 50% expected the economy to continue to improve, down from 59% last quarter, but still above all other prior quarters since the start of 2005. Most of the shift was toward the expectation that the pace of economic growth would remain unchanged, as just 7% of all CEOs anticipated a worsening economy.