Both CEOs and consumers continue to rate the economy as favorable, and expect little change over the next six months
Lynn Franco, Director of The Conference Board’s Consumer Research Center

Chief executives’ confidence in the nation’s economy, which had dipped to 61 in the final quarter of 2004, edged up to 62 in the first quarter of 2005. A reading of more than 50 points reflects more positive than negative responses.

The Conference Board's quarterly measure of CEO Confidence covers nearly 100 CEOs in a wide variety of industries.

“Both CEOs and consumers continue to rate the economy as favorable, and expect little change over the next six months,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “As for the employment outlook, CEOs are not as bullish as last year, and cite health care costs as the number-one major obstacle to hiring new workers.”

CEOs’ assessment of current conditions improved over the last quarter. Approximately 59 percent of CEOs say current economic conditions have improved, up from 53 percent last quarter. In assessing their own industries, close to 57 percent say business conditions are better this quarter, up from approximately 46 percent last quarter.

CEOs’ short-term outlook has not changed dramatically. Forty-three percent of business leaders expect economic conditions to improve in the coming months, down from 50 percent last quarter. Expectations for their own industries were also subdued with 47 percent anticipating an improvement, down from 52 percent last quarter. But fewer CEOs expect conditions, both economic and in their own industries, to worsen over the next six months than did last quarter.

Approximately 44 percent of CEOs anticipate an increase in employment levels in their industry, down from 50 percent a year ago. The proportion of CEOs that anticipate a decrease dipped to less than 11 percent from about 12 percent a year ago.

Health care costs remain the major obstacle to hiring new workers. Regulation and litigation costs were of less concern, while fringe benefits and wage and salary costs remain of minimal concern to business leaders when hiring new workers.