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CEOs' confidence declines further

By Furniture Today Staff -- Furniture Today, January 12, 2005

NEW YORK -- Chief executives' confidence in the nation's economy, which had fallen to 63 in the third quarter of 2004, fell again in the fourth quarter, finishing at 61, according to a study from the Conference Board.

The Conference Board's quarterly measure of CEO Confidence covers nearly 100 CEOs in a wide variety of industries. A reading of more than 50 points reflects more positive than negative responses.

"CEO confidence has now slipped for three consecutive quarters," says Lynn Franco, director of the Board's Consumer Research Center. "However, expectations are that the economy will continue to grow in 2005, just not as fast as it did in the first half of 2004."

While CEOs continue to rate current conditions favorably, they are less confident than in the third quarter of 2004. Only slightly more than half of CEOs surveyed claim that current economic conditions are better than six months ago, down from nearly two-thirds last quarter. In assessing their own industries, only 46 percent of survey participants say conditions are better, down from 57 percent in the third quarter.

CEOs also expressed less confidence in the short-term outlook than they did in the prior survey. Only half of business leaders expect economic conditions to improve in the coming months, down from 55 percent last quarter. Their expectations for their own industries, however, remain unchanged with 52 percent anticipating an improvement.

Inflation Outlook: Price Increases Expected

The majority of chief executives expect changes in their firms' selling prices in 2005 —with 14 percent anticipating price increases in excess of 10 percent. On average, firms plan to hike prices by 3.4 percent. Some 12 percent plan decreases and an equal percentage foresee no change.

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