The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council improved to 48 in Q3 2023, up from 42 in the second quarter. The Measure was still below a reading of 50, which suggests CEOs remained cautious about what's ahead for the economy. (A reading below 50 reflects more negative than positive responses.) A total of 127 CEOs participated in the Q3 survey, which was fielded from July 10 through 24.

Despite the brighter outlook, most CEOs still anticipated an economic downturn ahead. In Q3, 84% reported that they are preparing for a US recession over the next 12-18 months, compared to 93% in Q2. That said, the vast majority continued to expect a short and shallow US recession, with just 4% now expecting a deep US with major global spillovers—down from a high of 13% in Q4 2022. Meanwhile, the proportion of CEOs expecting no recession at all climbed steadily from 2% in Q4 2022 to 17% in the latest survey.  

"The gloom that pervaded among CEOs at the start of 2023 has lessened, but most are still treading carefully," said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. "In Q3, just 28% of CEOs reported general economic conditions to be better than they were six months ago, while 31% of CEOs said they are worse—down sharply from 55% last quarter. Meanwhile, future expectations improved moderately: only 39% of CEOs in Q3 expected general economic conditions to worsen over the next six months, down from 56% in Q2, while 30% anticipated worse conditions in their own industry, down from 40% in Q2."   

"Amid ongoing uncertainty, CEOs are shifting tactics to prepare for a downturn but are still challenged by unusual labor market conditions," said Dana M. Peterson, Chief Economist of The Conference Board. "With recession fears persisting, 63% of CEOs now plan to keep capital spending plans unchanged in the year ahead—up from 56% in Q2. That said, just 14% expected to decrease capital spending plans, compared to 22% planning to increase them. Attracting qualified workers remained difficult for the majority of companies: 74% of CEOs plan to raise wages by more than 3% over the next year. The competition for talent is fierce: 40% of CEOs expect to ramp up hiring in the next 12 months and another 40% are maintaining the size of their workforce—a sign of labor hoarding in an extremely tight labor market."

Current Conditions
CEOs' assessment of general economic conditions were markedly better in Q3:

• 28% of CEOs said economic conditions were better compared to six months ago, up from 17% in Q2.
• 31% said conditions were worse or much worse, a notable improvement from 55% in Q2.

CEOs were also less pessimistic about conditions in their own industries inQ3:

• 29% of CEOs reported that conditions in their industries were better compared to six months ago, up from 19%.
• 35% said conditions in their own industries were worse, down moderately from 44% in Q2.

Future Conditions
CEOs' expectations about the short-term economic outlook were slightly less bleak in Q3:

• 20% of CEOs said they expected economic conditions to improve over the next six months, up from 15%.
• 39% expected conditions to worsen, down significantly from 56%.

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

• 29% of CEOs expect conditions in their own industry to improve over the next six months—up slightly from 25% in Q2.
• 30% expect conditions to worsen, down from 40% in Q2.

Employment, Recruiting, Wages, and Capital Spending

• Employment: 40% of CEOs expect to expand their workforce over the next 12 months, up from just 33% in Q2. And, while 20% of CEOs expect a reduction in their workforce, similar to Q2, 40% expect little change.
• Hiring Qualified People: 56% of CEOs report some problems attracting qualified workers, similar to 52% in Q2. However, only 17% report difficulties that cut across the organization, rather than concentrated in a few key areas—down from 20% in Q2. Finally, 6% report no problem hiring in Q3, down from 9% last quarter.
• Wages: 74% of CEOs expect to increase wages by 3% or more over the next year, down slightly from 75% in Q2.
• Capital Spending: 22% of CEOs expect their capital budgets to increase over the next year, down from 27% last quarter.