CEO Confidence Hits Record Low

Plans for Hiring Hit Historic Low Amid Expectations of Economic Decline; Confidence Drops More Than 50% Since July 2007, Before Sub-Prime Crisis Hit

Following last month's steep declines, the Chief Executive magazine's CEO Confidence Index shed another 25.3 points, or 23 percent, this month, falling to 84.1 points, its lowest level since the magazine began tracking executive market sentiment in 2002.

All five component indices -- current, future, business, investment and employment -- hit record lows in March with the Business Condition Index experiencing the sharpest decline, falling 50 points, or 42 percent.

The dramatic drop in the overall confidence, which stood at 122 points at the end of 2007 and at 169.3 in July 2007, means CEOs have become sharply and decidedly worried about current economic conditions.

In a clear indication of that pessimism, 52 percent of CEOs -- the highest percentage ever recorded by the Index -- said they would characterize current business conditions as "bad." This represents a sharp contrast with last month's figures when none of the CEOs rated current business conditions as being "bad."

The Employment Index, which has historically been a leading indicator for future hiring trends, has also hit its record low this month, falling 20 points, or 19 percent, to 83 points. Moreover, the percentage of CEOs expecting a drop in employment over the next quarter reached a new peak at 57 percent, compared to 13 percent in March 2007. This is the first time the majority of executives predicted a drop in employment in the upcoming quarter, suggesting that job numbers will continue to weaken as the presidential election nears.

"CEO confidence took a dramatic turn for the worse right before all these fears about a possible recession and the faltering credit markets made headlines," said Edward M. Kopko, CEO and Publisher of Chief Executive magazine. "Having accurately foreseen the troubles we are still reeling to comprehend since the summer, their faith in the economy is tenuous, especially considering their expectations for future hiring."

While politicians and pundits on both sides of the aisle are proposing various remedies for homeowners or struggling financial firms, many CEOs see the market correction as a necessary step before the economy can turnaround. On that note, CEOs are clear to point out that the worst may not be over, with 45.1 percent expecting the economy to continue its correction and experience "gradual" or "rapid" decline over the next quarter.

"Issues underlying the country's future have been in the making for many years and they are beginning to hit home now," said one respondent wishing to remain anonymous. Another respondent noted, "The economy needs to work through the problems caused by the sub-prime abuses without government tinkering, which will only make it worse."

The CEO Index polling was conducted among 321 executives between March 11th and March 26th. For additional information regarding the confidence of public- and private-company CEOs, details about CEO attitudes on employment, investment and business conditions, visit our full report at http://www.chiefexecutive.net/ceoindex.

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Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 228,000. Chief Executive Group facilitates "Chief Executive of the Year," a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. Robert Ulrich, A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award's 22-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers. Visit www.chiefexecutive.net for more information.

CEO Index, March 2008

Respondents: 321

Noteworthy CEO Quotations:

"The amount of debt at every level of the economy combined with inflation will have an extreme negative effect on the overall economy." - Anonymous

"Congress has lowest confidence levels for good reason. We are paralyzed, and nothing on horizon indicates any willingness to compromise to move forward." - Anonymous

"Mortgage, sub-prime, and all capital markets are in turmoil. It is imperative to resolve these issues; which will then permit economy to firm up. If oil supply to USA is jeopardized [Venezuela political turmoil for example], USA will really have market freefall. Some facets of the economy are strong. Most facets of the economy are in contraction and adjustment." - Anonymous

"The availability of capital for investment/business expansion is being hampered by the sub-prime mortgage debacle and some solutions need to be developed to ensure capital is available for commerce and job expansion." - Anonymous

Index                            March, 2008        Monthly Change
CEO Index                           84.1                -25.3
Current Confidence Index             107                -43.8
Future Confidence Index             68.7                -12.6
Business Condition Index              71                -49.8
Invest Confidence Index             96.1                 -8.2
Employment Confidence Index          103                -19.6

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