What Is the CEO Confidence Survey?
The CEO Confidence Survey is a monthly survey of 100 chief executive officers (CEOs) from a variety of industries in the U.S. economy. The survey is conducted, analyzed, and reported by the Conference Board and it seeks to gauge the economic outlook of CEOs, determining their concerns for their businesses, and their view on where the economy is headed.
A reading of the survey index with a value above 50 indicates that the CEOs surveyed are more bullish than bearish on their economic outlook. The Conference Board's CEO Confidence Survey is seen as a leading economic indicator and it competes with Chief Executive magazine's CEO Confidence Index.
- The CEO Confidence Survey is a monthly survey of 100 chief executive officers (CEOs) from a variety of industries in the U.S. economy.
- This quarterly report, based on a survey of approximately 100 CEOs in a wide variety of industries, details chief executives' attitudes and expectations.
- It is distributed electronically in .pdf format. The survey is administered by The Conference Board, where CEOs are presented with a series of four questions.
How the CEO Confidence Survey Works
The quarterly report, based on a survey of approximately 100 CEOs in a wide variety of industries, details chief executives' attitudes and expectations regarding the overall state of the economy as well as their own industry.
It is distributed electronically in .pdf format. The survey is administered by The Conference Board, where CEOs are presented with a series of four questions. There are five reply options for each question.
A score for each question is determined by assigning the following values to the replies and calculating the average: Substantially Better—100; Moderately Better—75; Same—50; Moderately Worse—25; Substantially Worse—0.
The questions on the survey ask CEOs to reflect on the following: the current economic conditions versus six months ago; expectations for the economy, six months ahead; expectations for their own industry, six months ahead, and current conditions in their own industry versus six months ago. The confidence survey is derived from the average of the first three questions, thus the "Measure of CEO Confidence" can range from 0 to 100.
In 2013, the survey was expanded to include CEOs from Fortune 1000 companies in addition to members of The Conference Board.
Importance of the CEO Confidence Survey
The CEO Confidence Survey researches CEOs' views on hiring qualified workers, the expansion of the workforce, increases in wages, and revisions to capital spending plans.
CEOs are regarded as people who have the power to make large investment decisions that can impact the economy as a whole. This is why the CEO Confidence Survey can provide investors and traders with valuable insight into economic conditions.
The CEO Confidence Survey tends to be a leading indicator of economic activity such as changes in GDP growth and is used by investors and analysts as part of their overall economic analysis.
For example, let's assume a CEO of ABC Incorporated is taking the survey and is worried about future conditions for the firm and industry. When taking this survey they may rate conditions at their firm with a 25, indicating moderately worse, or with a 0, indicating significantly worse.
By putting this information into the survey, once released the overall market can gauge this downbeat expectation and adjust their positions accordingly, being that it is considered a leading indicator.
How Is the CEO Confidence Calculated?
The "Measure of CEO Confidence" is calculated from the answers of 100 CEOs based on their view of current and future business conditions in the economy. CEOs answer four questions, three of which make up the confidence survey, with an answer of either substantially better—100; moderately better—75; same—50; moderately worse—25, or substantially worse—0.
What Does Business Confidence Mean?
Business confidence refers to how companies feel about the future expectations of their business, the stock market, and the economy as a whole, as seen through surveys that gauge various indicators, such as growth and employment.
What Can Increase Business Confidence?
Expansionary monetary and fiscal policies can increase business confidence. These policies primarily include a reduction in interest rates and taxes.