CEO confidence in economy improves

The Conference Board said its survey of 100 business leaders across a wide range of industries found that confidence in the economy climbed from 50 in the third quarter to 56 by the fourth quarter last year. A reading of more than 50 points reflects more positive than negative responses.

“Much of the improvement in confidence can be attributed to the resiliency of the economy post-Katrina and the recent declines in fuel prices,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

“Despite the rebound, CEOs were less confident at the close of 2005 than at the start,” she noted. “Looking ahead, they are cautiously optimistic, but not as optimistic about the short-term outlook as they were at the end of 2004. As for their inflation expectations for 2006, they expect modest increases, about 3.4%, much the same as they expected for 2005.”

Close to 44% of the surveyed CEOs claim current overall economic conditions are better, up from 34% in the third quarter. In assessing their own industries, about 39% said conditions are better, up from 35% in the prior survey. In terms of short-term economic performance, roughly 41% of the business leaders polled by the Board expect economic conditions to improve in the next six months, up from 34% in the previous report.

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