What we’ve learned over the years through our Vistage CEO Confidence Index is that confidence has proven to be a harbinger for economic growth. The greater our confidence, the higher our expectations, and the better we perform. It’s the Pygmalion effect in its full splendor. We’ve also learned, however, that one of the enemies of confidence is uncertainty. We certainly can’t control all the uncertainties out there, but we should take command over those issues we can control. It’s hard to imagine that as we’re still digging out from the biggest economic crisis in recent history, we’re going to add to our growing list of uncertainties with the self-inflicted wound of a government shutdown. It’s simply irresponsible.
Consider this: We just released the findings of the Q1 Vistage CEO Confidence Index, a survey of 1,728 Vistage members from across the country. The good news is that although confidence dipped slightly from Q4, it remains higher than it’s been in more than five years, with 63% of small business CEOs telling us they feel the economy is stronger today than it was a year ago. The troubling news is that growing uncertainties are undermining CEO confidence. Last quarter, 59% of CEOs said that the economy would improve over next twelve months; this time, it was 50%, as turmoil in the Middle East, the ongoing crisis in Japan, and policies here at home are creating a climate of increased caution just as we’re striving to rebuild our economy.
CEOs said overwhelmingly that higher gas prices will have an adverse impact on their businesses, and 38% of them reported seeing evidence of reduced consumer spending already. Higher costs will mean higher prices, as 49% of CEOs said they expect to raise prices for their own products and services over the next year – up 20% from Q4.
We’re juggling enough uncertainties as it is. Let’s hope that by Midnight Friday, our leaders come up with a budget that will keep the lights on and our confidence up.