CEO confidence ticks down slightly; hiring difficulties persist

The nation’s CEOs are preparing for a recession. The good news is that they still expect it will be a short one. 

The Conference Board Measure of CEO Confidence, in collaboration with The Business Council, declined slightly to 42 in the second quarter of 2023, down from 43 in the first quarter of the year.  The Measure is still below a reading of 50, which suggests CEOs remain largely pessimistic about what’s ahead in the economy.  (On the consumer front, the  Conference Board Consumer Confidence Index fell to 101.3 in April, down from 104.0 in March.)

Similar to last quarter, 93% of CEOs report they are preparing for a U.S. recession during the next 12–18 months. Most (87%) believe the recession will be brief and shallow, with limited global spillovers. (The survey was  fielded from April 10 through 24.)

“Even as dramatic bank failures stoked fears of systemic breakdown, CEOs remain nearly unanimous in expecting a short and shallow U.S. recession ahead, with just 6% preparing for a deeper downturn with major global spillovers,” said Roger W. Ferguson, Jr., vice chairman of The Business Council and Trustee of The Conference Board. “At the same time, CEO confidence remains appreciably higher than the depths seen last year.”

The executives’ expectations about the short-term economic outlook pulled back in the second quarter, with 56% expecting conditions to worsen, up from 48% in the first quarter.  Fifteen-percent said they expected economic conditions to improve. 

A majority (62%) of firms are examining their banking relationships in light of the current U..S and EU banking sector turmoil as well as focusing on risk and adequacy of liquidity, according to the report. Thirty-three percent (33%) are examining the liquidity adequacy of customers and 30% are doing the same of suppliers. Twenty-eight percent (28%) are increasing their own company liquidity.

Highlights from the survey regarding employment, recruiting, wages and capital spending are below.

• Employment: 33% of CEOs expect to expand their workforce over the next 12 months, down from 37% in the first quarter. And, while 20% expect a net reduction in their workforce, 46% expect little change.
• Hiring Qualified People: 52% of CEOs report some problems attracting qualified workers, somewhat improved compared to 57% in the previous quarter.  Even so, 20% report difficulties that cut across the organization, rather than concentrated in a few key areas — up from 17% last quarter. Finally, 9% report no problem hiring, up from 7% in Q1.
• Wages: 75% of CEOs expect to increase wages by 3% or more over the next year, down slightly from 81% in the fourth quarter of 2022.
• Capital Spending: 27% of CEOs expect their capital budgets to increase over the next year, down from 30% last quarter.

The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. The Business Council is a forum for the CEOs of the world’s largest multinational corporations across all industry sectors.