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CEO Confidence Picked Up in Q1, but CEOs Remain Pessimistic Entering 2023

Confidence Improved from 2022's Lows, but Still Signals Caution

NEW YORK, Feb. 9, 2023 /PRNewswire/ -- The Conference Board Measure of CEO Confidencetm in collaboration with The Business Council stands at 43 to start 2023, up from 32 in the final quarter of 2022. The Measure's improvement early in Q1 2023 represents an uptick from the extreme weakness seen last year, which brought it to lows comparable to the depths of the COVID-19 recession in 2020. However, it is still below a reading of 50, which suggests CEOs remain cautious at the start of 2023.  (A reading below 50 reflects more negative than positive responses.) A total of 142 CEOs participated in the Q1 survey, which was fielded between January 17 through 30. 

In the survey, 93 percent of CEOs still report they are preparing for a US recession over the next 12-18 months (compared to 98 percent in the Q4 2022 survey). They also still expect that the recession will be brief and shallow with limited global spillover (86%). However, the percentage who are preparing for a deep US recession dropped from 13 percent in Q4 2022 to 7 percent in Q1 2023, signaling that some CEOs are somewhat less pessimistic. Nonetheless, 55 percent of CEOs believe that a global recession is the greatest challenge for their companies.

"CEO confidence rose markedly between Q4 2022 and Q1 2023, but continued to signal a degree of pessimism among CEOs," said Dana M. Peterson, Chief Economist of The Conference Board. "CEOs' assessments of both current and expected economic conditions picked up from 2022's extreme lows, but still are far from 2021's peak. Roughly 6 in 10 CEOs still say economic conditions are worse than they were six months ago. However, the proportion of CEOs expecting economic conditions to worsen over the next six months declined sharply from 74% last quarter to 48% in Q1, with just 33% now expecting conditions in their own industry to deteriorate."   

"CEOs continue to see dichotomies in economic conditions and what it means for the future," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. "While CEOs are still girding for a recession in 2023, they continue to experience a tight labor market. Notably, 81% of CEOs plan wage increases of three percent or more, and most expect to either expand (37%) or maintain (44%) the sizes of their payroll headcounts in the next 12 months. Cost pressures remain high, but there has been some easing in transportation and energy costs. Regarding managing elevated input prices, nearly 6 in 10 say they are passing higher costs on to consumers. Generally, going forward, CEOs will monitor consumer price inflation and GDP as gauges of the health of the US economy in 2023."

Current Conditions 
CEOs' assessment of general economic conditions improved at the start of Q1:

CEOs were more optimistic about conditions in their own industries to start Q1:

Future Conditions 
CEOs' expectations about the short-term economic outlook improved to start Q1:

CEOs' expectations regarding short-term prospects in their own industries also improved to start Q1:

Employment, Recruiting, Wages, and Capital Spending

US Recession Outlook:
Majority of CEOs are preparing for a brief and shallow US recession, with limited global spillover, over the next 12-18 months.

Input Costs:
Majority of CEOs are managing input costs by passing them onto customers while a close second action was cutting operating, research, and/or general overhead.

Easing in Cost Pressures:
Elevated wage pressures persist, but there are signs of easing in costs for transportation and energy.

Managing Labor Costs:
A slight majority of CEOs said they are still increasing wages across the board but are managing rising labor costs through other means; almost half said they are reducing hiring plans, including selective hiring freezes.

Top Watched Gauges of the US Economy:
CEOs said they will be watching consumer inflation and GDP as important gauges of the health of the US economy in 2023.

Biggest Challenge in 2023:
Majority of CEOs see global recession as the biggest challenge facing their company in 2023.

Source: CEO Confidence Survey, First Quarter 2023/The Conference Board. 
The Q1 survey was fielded during 1/17 through 1/30.

About The Conference Board 
The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org

About The Business Council 
The Business Council is a forum for the CEOs of the world's largest multinational corporations across all industry sectors. Members gather several times each year to share best practices, network and engage in intellectually provocative, enlightening discussions with peers and thought-leaders in business, government, academia, science, technology and other disciplines. Through the medium of discussion, the Council seeks to foster greater understanding of the major opportunities and challenges facing business, and to create consensus for solutions. The Business Council is a non-partisan, not-for-profit entity holding 501 (c) (6) tax-exempt status. The Business Council does not lobby. Visit The Business Council's website at www.thebusinesscouncil.org 

SOURCE The Conference Board

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