Confidence Among Small and Midsize Business CEOs Dips in Q2 2024
Economic Optimism Decreases Following Four Consecutive Quarters of Growth, According to Latest Vistage CEO Confidence Index
SAN DIEGO, July 17, 2024 /PRNewswire/ -- Small and midsize business (SMB) CEO confidence decreased slightly to 83.3 in Q2 2024, according to the latest CEO Confidence Index released by CEO coaching and peer advisory organization Vistage.
The dip in CEO confidence occurred after four consecutive quarters of gains, driven by a decrease in economic optimism. Nearly two-thirds (64%) of CEOs report higher interest rates are impacting their business, directly affecting profitability.
"It's not swimming, but it's not drowning is the best way to describe CEO's wavering confidence," said Joe Galvin, Vistage's chief research officer. "CEOs, however, are not treading water while waiting for the economy to spark. Instead, they are focused on improving productivity internally to counteract external economic hardships. Our data shows there are four strategies that CEOs are implementing across the board: utilizing AI and automation, enhancing training and development, implementing technologies to streamline processes, and improving employee engagement and culture."
Vistage has measured SMB CEOs' sentiment on a variety of economic and business factors every quarter since 2003. Analysis using ITR Economics' rate-of-change methodology has revealed the Vistage CEO Confidence Index to be a leading indicator of the U.S. Industrial Production Index nine months in advance.
"The promise of a future growth cycle remains," Galvin said. "It's maybe just a little further out than we'd hoped, based on the decline of the Index this quarter."
Lauren Saidel-Baker, CFA and economist at ITR Economics noted, "Despite the dip in the Vistage CEO Confidence Index, it's crucial to contextualize this data within broader trends. Long-term rates of change are still rising, suggesting that the current decline might not signal a prolonged downturn." She added, "Regarding labor market trends, wage inflation remains a significant issue due to a mismatch between job openings and available workers. CEOs should focus on retaining top talent and making efficient investments like AI and technology to prepare for the anticipated growth in 2025."
Q2 2024 Vistage CEO Confidence Index highlights include:
Economic pessimism among CEOs increases.
- The number of CEOs reporting economic improvement over the past year fell to 18% in Q2, compared to 26% in Q1 2024.
- 23% of CEOs expect the economy to improve in the next year, down from 26% the prior quarter.
Inflation and interest rates are impacting businesses.
- 64% of SMBs reported that they are feeling the impacts of higher interest rates.
- CEOs cited labor as the biggest source of inflation (59%).
- Raw materials were the second biggest source of inflation at 12%.
AI is no longer the future of the workplace; it is in the present.
- 30% of CEOs are increasing spending in AI, with another 12% redirecting existing budgets towards AI.
- 55% are making no changes to their AI spending, which corresponds to the 55% who are also not adjusting staff or training because of AI.
- When asked about how AI is impacting their hiring:
- 32% of CEOs say they are training staff.
- 8% of CEOs say they are hiring new talent.
- 6% of CEOs say they are creating new roles or teams.
- 11% of CEOs say they are redefining job roles.
See the full results of the Q2 2024 Vistage CEO Confidence Index at vistage.com/ceoindex.
About the Vistage CEO Confidence Index
Established in 2003, the Vistage CEO Confidence Index surveys small and midsize business CEOs, presidents, and business owners about the U.S. economy every quarter. The Q2 2024 Vistage CEO Confidence Index includes responses from 1,708 U.S. CEOs, surveyed between June 3 and 17, 2024. Using ITR Economics' rate-of-change methodology, analysis has revealed that the Vistage CEO Confidence Index is a leading indicator of the U.S. Industrial Production Index 9 months in advance.
The Vistage CEO Confidence Index is recognized as the definitive voice of high-performing, high-integrity small and midsize business leaders. As a trusted resource, the Index provides world-class insights to inform decision-making for CEOs and other key leaders of small and midsize businesses.
About Vistage Worldwide, Inc.
Vistage is the world's largest CEO coaching and peer advisory organization for small and midsize businesses. For more than 65 years, we've been helping CEOs, business owners, and key executives solve their greatest challenges through confidential peer groups and one-to-one executive coaching sessions. Today, more than 45,000 members in 35 countries rely on Vistage to help make better decisions for their companies, families, and communities. The results prove it: Vistage CEO members grew their annual revenue on average by 4.6% in 2020, while non-members with comparable small and midsize businesses saw revenue decrease by 4.7%, according to a study of Dun & Bradstreet data. Learn more at vistage.com.
SOURCE Vistage Worldwide, Inc.
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