Following two consecutive months of sharp declines, monthly Chief Executive magazine CEO Index, which surveyed 635 top U.S. executives, rebounded slightly in April, rising approximately 15 percent to 96.4 points.  However, the Index still continues to hover around its lowest levels since 2003 and well below (63 percent) where it was this time last year. 

All five component indices—current, future, business, investment and employment—experienced marginal growth, with the Future Confidence Index recording the sharpest increase, rising 15.7 percent to 84.4 points. 

The relative strength of the Future Confidence Index suggests that CEOs may be thinking that the worst may be over.  Andrew Cagnetta, CEO of Transworld Business Brokers, acknowledges boost and says, the economy "has slowed down, but the worst may be behind us.  Watch for a flat second quarter, with improving profits by third and fourth."  

In one of the other signs of slight improvement, CEOs, for the first time after three months of declines, increased their employment outlook over the next quarter: In April, 14 percent of CEOs indicated that they expect employment to increase over the next quarter, compared to nine percent in March. 

"While far from confident, many CEOs are starting to wonder if the economy is at the low-point of past several months," says Edward M. Kopko, CEO and Publisher of Chief Executive magazine. "According to our research the economy is in a very precarious position right now. CEOs are torn over whether the worst is over, but when they do become more confident, they will add much-needed fuel to our economic engine."

 As economic conditions continue to persist, CEOs respond to rising oil prices, a weak dollar, and economic crises in the credit and housing sectors and make efforts to sustain business through international opportunities.  John Friedman of Darco Enterprises says, "We shipped most of our manufacturing capabilities offshore or to Mexico, so we cannot take full advantage of the weakening dollar."  Moreover, CEO outlook remains grim, over half of CEOs polled (52 percent) said they would rate current economic conditions as "bad," compared with only eight percent who said they would rate them as "good." 

Meanwhile some CEOs attribute the fall in confidence to external economic factors, including media speculation.  "The media hypes the economy, preaches doom and gloom and uses scare tactics to bolster ratings and appeal to the incredibly short American attention span," says Bob Gutenfick, CEO of Gutenfick & Associates.

As CEO Confidence in the economy has hit historic lows not seen in five years, Chief Executive Magazine conducted special polling this month about the prospective presidential candidates. The Magazine asked CEOs their preference between the Democratic rivals Barack Obama and Hillary Clinton, currently locked in a fight for their party's nomination. Respondents were also asked who they would vote for in a hypothetical matchup between the GOP nominee, John McCain, and either Democratic candidate.

In the hypothetical three head-to-head contests, there is a clear order of preference in the mind of CEOs. Top of their list is John McCain, who beat Barack Obama by a margin of 3:1 and Hillary Clinton by a margin of 5:1. Dave Wilson, CEO of the Graduate Management Admission Council, said, "As the economy enters this fragile state, the country can ill afford to elect either Clinton or Obama. Their fiscal policies will assure us of a long and deep recession." Frank Stalzer, President of Astrex Electronics, agrees: "Neither  Clinton nor Obama understand the effects  of tax increases on business in America. Either one of them would be extremely detrimental to the economic well being of our country. We need someone who understand pro-growth economics."

While their preferences for Senator McCain are clear, CEOs are still open minded about who is the best candidate. One respondent said, "I do not trust Hillary and would never vote for her. I am torn between Obama and McCain," while another said McCain's choice as VP would be a "very important" factor in the decision to support him. Other respondents explicitly stressed the need for bipartisan consideration: "Based on GDP from 1929 to 1970, a case can be made for business doing better under Democratic administrations - not by much, but marginally better."

When forced to pick between the two Democratic candidates, CEOs overwhelmingly prefer Barack Obama to Hillary Clinton, by almost 2:1. One respondent, wishing to remain anonymous, said, "Obama will provide this nation with the much needed new direction - we need change and we need to have an individual that represents change. All other candidates represent the status quo, maybe not by their policies but by the perception of the population as a whole."

Still, almost as many people said they would rather vote for neither democrat (38%) than the more popular Obama (39%). On the other hand, no more than 5% were undecided about their vote when choosing between McCain and either democrat. Garry Bradford, President and CEO of Unique HR, said, "I could give you thousands of reasons to vote against Obama and Clinton but I need to get back to work." "McCain is clearly considered less of a threat to business than either of the democratic candidates," said Edward M. Kopko, CEO and Publisher of Chief Executive Magazine. "Even though many CEOs perceive him as the best available option, rather than their ideal candidate, the extent of their refusal to vote for either Obama or Clinton is telling."

CEO Index Bonus Question, April, 2008
Respondents: 635

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