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Vistage: CEOs optimistic about their own companies

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Vistage: CEOs optimistic about their own companies

About the overall economy? Not so such.

According to the results of survey issued today by executive coaching firm Vistage, CEOs of small and midsized companies held more optimistic expectations for gains by their own firms, even though they held less favorable views about the overall economic environment.

Despite the debates about federal spending and the debt ceiling as well as prospective changes in monetary policies (the survey was conducted prior to the Fed's recent surprise announcement), firms expressed an increasing level of confidence that prospects for their firms would steadily improve during the year ahead. The Q3 2013 Vistage CEO Confidence Index was 97.8, just above the 96.7 in the 2nd quarter survey, but substantially above the 89.0 recorded in last year's 3rd quarter.

http://www.multivu.com/assets/62517/photos/62517-Q3-2013-12moOutlook-original.jpg?1380570365Two-thirds of all CEOs believed that their business would ultimately suffer from the burden of increasing federal debt, but nonetheless expressed greater confidence in all aspects of their business. CEOs expected higher revenues and profits, and were more willing to boost fixed investments and hiring. Seven-in-ten CEOs would prefer legislation that balanced increases in the debt ceiling with reductions in federal spending.

Economy Weakens Slightly. In the 3rd quarter 2013 survey, 46% reported that the economy had recently improved, down from 53% last quarter, but still well above last year's 27% or the 18% recorded two years ago during the last budget battle. Just 8% of all firms thought economic conditions had already worsened. When asked about economic prospects for the year ahead, 30% expected an improving economy, down slightly from 33% one quarter ago and 36% two quarters ago. While no diminution of optimistic prospects is welcome, most firms believe the existing economic strength is sufficient to overcome the budget battles. Indeed, the recent falloff has been quite small compared to the sharp declines amid past budget debates.

Higher Sales and Profits. Higher sales revenues were anticipated by 71% of all firms in the 3rd quarter 2013 survey, up from 68% last quarter and 66% a year ago. Just 5% expected revenues to decline, barely above the all-time low of 4% last recorded in 2006. Expanding profits were anticipated by 54% of all firms in the 3rd quarter, the highest figure recorded since the start of 2012. Declining profits were expected by just 11% in the latest survey. Managing costs were still cited by one-in-four firms as their biggest challenge, with another one-in-four mentioning customer retention as the most significant challenge. Overall, sales and profit expectations were quite favorable indicating that firms have adapted to a slow growth economy.

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