Chief Executive Research
Four years into a decade punctuated by a global health pandemic that shuttered businesses, continuing labor shortages, record-high inflation, geopolitical conflicts, supply chain disruptions, social unrest, once-in-a-century climate events and controversial elections it’s safe to say CEOs have been tested. So perhaps it should come as no surprise that most remain cautious—and somewhat fearful—of what lies ahead.
That’s the story from our October CEO Confidence Index survey. After improving by 2 percent in September, CEOs’ optimism for the year ahead slipped by the same margin in October, falling back to its August level of 6.3 out of 10—on a scale where 10 is excellent and 1 is poor.
Our forward-looking indicator, which measures sentiment among CEOs for business conditions 12 months out, is now 10 percent off its 2024 high of 7/10 reached in March and essentially the same as where it started the year.
Plenty of factors contribute to the decline in confidence, according to those polled. Among them is, of course, the upcoming presidential election in the U.S. CEOs are fairly divided about the outcome next month: nearly half (46 percent) of the 208 polled on October 1-2 say the result of this election “has the power to dramatically change the course of business and the state of the economy.”
Another 46 percent say that while the 2024 election does have “the potential to affect the course of business, it will be to somewhat limited consequences overall.”
While CEOs are split in their support for Kamala Harris and Donald Trump, Tim Zimmerman, CEO of Mitchell Metal Products, says both will hurt business. “I do not see a positive outcome via either candidate,” he said. “Higher taxes are on the horizon, and pending which candidate is elected, significant tariff changes could cause additional raw material inflation that will have significant negative impact on our global competitiveness.”
The remaining 8 percent say the election will have little to no impact on business conditions.
“Normally, a President has significant influence, but not as much with divided government,” said the CEO of a mid-market real estate company to explain his perspective.
“I think the lead up to the election is more impactful than the actual election,” said a manufacturing CEO, echoing other CEOs’ comments on the issue.
Another factor at play, CEOs say, is the intensifying tension in the Middle East, which at the time of polling was further amplified by the port strike, which makes it challenging to remain bullish about the near term—particularly for those reliant on foreign supply chains.
“Longshoreman strike impacts are unknown but could be crippling,” said the CEO of a publicly traded manufacturing company.
All of those factors could cause things to change drastically—and the Fed to hold rates at their next meeting, some said.
When it comes to the Fed, CEOs are once again divided: 56 percent say the 50-basis point cut implemented in September—and the lure of more cuts ahead—has bolstered their outlook for the future, but the remaining 44 percent say it has made no difference in their outlook.
What this means today is that a third of CEOs continue to expect a recession in the year ahead—though that is down from 60 percent when we asked them the same question in August.
Only 1 percent of those polled the first week of October say they expect that recession to be severe, vs. 7 percent in August.
Today 42 percent of those polled said they expect a soft landing, vs. 32 percent who felt the same just two months ago. “While a market correction is overdue, I still believe the Fed is on track for a soft landing,” said Karim Chichakly, co-president of isee systems.
For now, a quarter of CEOs expect growth in 2025, up from only 8 percent who had such a positive outlook back in August.
Despite all the factors that can take a wrong turn, 43 percent of CEOs are nonetheless betting on business conditions to have improved by this time next year—many of them citing the fact that we will by then be past the election and have clearer guidance.
“Uncertainty around the election will dissipate, and we will see the benefits of the current and expected future interest rate cuts,” said the CEO of a PE-backed company.
Meanwhile, CEOs’ assessment of current business conditions has remained flat for the past three months, at 5.9/10—the lowest level since November of 2023.
The economic and political uncertainty is translating to corporate forecasts, with little change to the proportion of CEOs who anticipate increased revenues and profits by this time next year: 69 percent and 60 percent, respectively—from 69 and 59 percent in September.
The impact of the uncertainty is clear when looking at CEOs’ capital allocation plans: 36 percent now intend to increase capex in the months ahead—down from 45 percent in September—and 42 percent plan to increase hiring over the next 12 months—down from 51 percent in September. As Matt Guse, president of MRS Machining, put it: “No one wants to invest with so many unknowns.”
The CEO Confidence Index is America’s largest monthly survey of chief executives. Each month, Chief Executive surveys CEOs across America, at organizations of all types and sizes, to compile our CEO Confidence Index data. The Index tracks confidence in current and future business environments, based on CEOs’ observations of various economic and business components. For additional information about the Index and prior months data, visit ChiefExecutive.net/category/CEO-Confidence-Index/
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