Confidence among CEOs in the United States has plunged in the past month due to the economic fallout of the novel coronavirus crisis.
According to The Conference Board, the metric fell from 43 in last year’s fourth quarter to 36 in the first quarter of 2020, dropping to levels not seen since the height of the Great Recession in 2008. In addition, a follow-up survey from late March to early April revealed an even larger decline to 34. To put this in perspective, a reading of more than 50 points reflects more positive than negative responses.
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“The sharp fall was driven by a dramatic deterioration in sentiment about the current state of the economy,” wrote senior director of economic indicators and surveys Lynn Franco, who added that 80% of these CEOs noted a substantial coronavirus-related impact on their businesses.
Tracking two time frames, the research group found a striking shift in attitudes: From mid-February to mid-March, more than 70% of participating CEOs suggested that the state of the economy had deteriorated compared to six months ago. By late March to early April, 97% said conditions were significantly worse.
The Conference Board attributed the plunge to the Labor Department’s report on March 26 that showed a whopping 3.3 million Americans had filed for unemployment in a single week, as well as signs of a “severe pullback” in consumer spending, particularly on discretionary expenses. In total, the Labor Department reported in excess of 16 million jobless claims over the last three weeks.
However, there was a silver lining: For the month starting mid-February, only about a quarter of CEOs felt that the economy would be better six months down the road. But in late March to early April, about half of those leaders said they can see the economy improving in a half-year from now.
“Despite the overall decline in confidence and negativity about the present situation, by early April, CEOs felt less pessimistic about the short-term outlook,” said chief economist Bart van Ark.
Likely boosting that sentiment are recent moves by Congress, the Trump administration and the Federal Reserve to help prop up the struggling economy. Today, the central bank announced details of its Main Street business lending program and several other initiatives aimed at boosting small and mid-size firms as well as cities and states suffering from the pandemic’s impact.
What’s more, in late March, President Donald Trump signed the $2 trillion emergency relief CARES Act intended to provide financial aid to businesses, individuals and state governments. The deal includes $250 billion in checks to individuals and families, $250 billion in jobless insurance benefits, $350 billion in small business loans and $500 billion in loans for distressed companies.
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