What Does CEO Optimism Really Tell Us?

After about 10 years of analyzing data from our Vistage CEO Confidence Index (a quarterly survey of our Vistage CEO members), University of Michigan’s Dr. Richard Curtin made an interesting discovery.  He concluded that the survey results serve as a six-month harbinger for U.S. GDP and offer a six-nine month outlook for domestic employment.   A big reason for this of course is that it’s a survey of well informed CEOs who are telling you what they are seeing in the economy and how they plan to act on it.  The data doesn’t come from the pundits, it comes from the actual decision makers.   That’s why it is such an effective window into the near-term future.

While just two and a half years old, I suspect that somewhere down the road, the data coming from our WSJ/Small Business CEO Survey (a monthly survey of Vistage members leading companies of $1 million – $20 million in revenues) will show a similar pattern.  The February results reveal a level of CEO optimism that has remained unchanged for four months is it as its highest since we began conducting the survey in 2012. Small business CEOs are showing unprecedented confidence in the overall economy, and they are projecting increased sales and profits for their own companies.  This sets the stage for additional hiring and capital investment, with 64% intending to add employees and 52% planning to increase their investments in plant and equipment.  Because these Vistage CEOs have historically delivered on what they say they will do, and their actions tend to align with marketplace trends at large, the survey results are worth paying attention to.

The full report, including Dr. Curtin’s analysis, for the February WSJ/Vistage Small Business CEO Survey is available for your review along with the data from past surveys as well. You’ll also find out more in The Wall Street Journal.  The positive news is not only revealing, it’s refreshing!

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