The Conference Board Measure of CEO Confidence in collaboration with The Business Council declined slightly to 42 in Q2 2023, down from 43 in the first quarter of the year. The Measure is still below a reading of 50, which suggests CEOs remain largely pessimistic about what's ahead in the economy. (A reading below 50 reflects more negative than positive responses.) A total of 139 CEOs participated in the Q2 survey, which was fielded from April 10 through 24. 

CEOs are still pessimistic about the downturn to come. Similar to last quarter, 93% of CEOs still report they are preparing for a US recession over the next 12–18 months. Indeed, 87% believe the recession will be brief and shallow with limited global spillovers and 6% expect a deep US recession.

"After improving sharply to start the year, CEO confidence ticked down slightly in Q2 and remains firmly in negative territory," said Dana M. Peterson, Chief Economist of The Conference Board. "CEOs' view of current economic conditions continued to be negative, with 55% of CEOs still reporting general economic conditions are worse than they were six months ago. Meanwhile, future expectations deteriorated in Q2: 56% of CEOs expect general economic conditions to worsen over the next six months, while 40% expect worse conditions in their own industry—up from 48% and 33%, respectively, in Q1."   

"The more things change, the more they stayed the same for CEOs in Q2," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board.  "Even as dramatic bank failures stoked fears of systemic breakdown, CEOs remain nearly unanimous in expecting a short and shallow US recession ahead, with just 6% preparing for a deeper downturn with major global spillovers. At the same time, CEO confidence remains appreciably higher than the depths seen last year. Meanwhile, leaders are acting to insulate themselves from the turmoil in US and EU banks: 62% of CEOs are examining their firms' banking relationships, and large numbers are also reviewing their firms' risk management practices and liquidity adequacy—as well as those of customers and suppliers."

Current Conditions
CEOs' assessment of general economic conditions was slightly better in Q2:

• 17% of CEOs said economic conditions were better compared to six months ago, slightly higher than 16% in Q1.

• 55% said conditions were worse or much worse in both Q1 and Q2.

CEOs were slightly less optimistic about conditions in their own industries to start Q2:

• 19% of CEOs reported that conditions in their industries were better compared to six months ago, down from 23%.

• 44% said conditions in their own industries were worse, slightly higher than 43% in Q1.

Future Conditions
CEOs' expectations about the short-term economic outlook pulled back in Q2:

• 15% of CEOs said they expected economic conditions to improve over the next six months, down from 18%.

• 56% expected conditions to worsen, up from 48%.

CEOs' expectations regarding short-term prospects in their own industries also deteriorated slightly:

• 25% of CEOs expect conditions in their own industry to improve over the next six months—slightly less than 26% last quarter.

• 40% expect conditions to worsen, up notably from 33% in Q1.

Employment, Recruiting, Wages, and Capital Spending

• Employment: 33% of CEOs expect to expand their workforce over the next 12 months, down from 37% in Q1. And, while 20% expect a net reduction in their workforce, 46% expect little change.

• Hiring Qualified People: 52% of CEOs report some problems attracting qualified workers, somewhat improved compared to 57% in Q1. Even so, 20% report difficulties that cut across the organization, rather than concentrated in a few key areas—up from 17% last quarter. Finally, 9% report no problem hiring, up from 7% in Q1.

• Wages: 75% of CEOs expect to increase wages by 3% or more over the next year, down slightly from 81% in Q4.

• Capital Spending: 27% of CEOs expect their capital budgets to increase over the next year, down from 30% last quarter.

US Recession Outlook:
A vast—and still growing—consensus of CEOs is continuing to prepare for a brief and shallow US recession, with limited global spillover, over the next 12-18 months.

Bank Challenges:
A majority of firms are examining their banking relationships in light of the current US and EU banking sector turmoil as well as focusing on risk and adequacy of liquidity.

Federal Funds Rate:
Most CEOs expect the Fed's target rate to remain high or rise further in 2023.

Top Economic Factors for Monetary Policy:
CEOs continue to view inflation as by far the most important factor influencing monetary policy in 2023, followed by labor market tightness and the risk of further turmoil in the banking sector.