High CEO Confidence Not Reflected In Consumer Confidence

Last week the Conference Board reported the Measure of CEO Confidence for the first quarter of 2021 at 73, a 17-year high for the reading. A as the Board notes, readings above 50 reflect there were more positive than negative responses. The survey was conducted January 14 through January 29. As reflected by the consumer though, the Conference Board's reading shows consumer confidence at 89.3 and far below the 135 reading prior to the pandemic induced recession. The consumer reading is anticipated to be updated in the coming week. Of significance is the fact other consumer confidence and sentiment readings, like University of Michigan's, also show lower levels of consumer confidence.

With respect to the CEO Confidence measure, the Conference Board's report noted:

• "67% of CEOs reported economic conditions were better compared to six months ago, down slightly from 70%."

• "However, only 10% said conditions were worse, down from 21%.

• "78% of CEOs anticipated improved conditions in their industry, up from 65%.

• "7% expected conditions to worsen, down from 11%."

CEO confidence is important as it can drive increased hiring. In fact the survey did highlight that 47% of CEOs expect to expand their workforce over the next 12-months versus 33% in the September survey.

Seeing an improvement in consumer confidence is important as the consumer represents 70% of economic activity. Last week's unexpected increase in initial jobless claims to 861,000 (765,000 expected) is a trend that needs to be reversed.

Pent-up demand and falling virus cases will likely drive positive economic activity near term; however, broader improvement in the employment market is needed to see sustained economic growth into 2022.