CEO Confidence Index January 2007

CEO Confidence Pulls Back After Strong Gains

After rising by almost 11% since September, the Chief Executive CEO Confidence Index fell slightly this month. It fell by 3.2 points to 162.0 according to 356 top executives surveyed. CEOs also rated the best and worst states for doing business, weighing in on taxation, regulation, workforce quality, and the living environment among other attributes.

Of the five component sub-indices used to calculate the overall CEO Index, all but one fell this month. The Employment Confidence Index rose modestly by 2.0 points to 177.4. Over half of CEOs polled (50.7%) rated current employment conditions as "good." The Investment Conditions Index, normally very stable, led the losses this month, falling by 6.7 points to 137.5. As a sign of their concern over investment conditions, only 42.7% of CEOs surveyed said they regarded current investment conditions as "good."

CEOs cited interest rates and spending in Washington among their main concerns for the economy. One CEO opined that the "Fed has again (like in '99-'00) over-tightened, swinging at an inflation ghost." Another said "I think the status quo held this past month, but I am still not sold on the future. Until Congress shows it's [sic] serious about deficit and debt reform, our future still looks very dark."

This month Chief Executive Magazine continued for a third straight year its analysis into the best and worst states for doing business. CEOs were asked, in their estimation, to list the 3 best and worst states to do business. For the states listed, respondents were asked to grade them (A-F) on 3 categories: "Taxation & Regulation," "Workforce Quality," and "Living Environment." Texas and Nevada ranked as the two best states for the third straight year. Florida returned to its spot as the third best, after falling to fourth last year. North Carolina and Arizona rounded out the top 5. One CEO pointed out, "Employer friendly states such as Texas and Arizona really allow growth of employment and support of the economy."

As for the worst states to do business, they have remained the same every year: CEOs again rated California, New York, and Massachusetts as the worst states in which to do business. Louisiana and Michigan ranked just above the worst three. Yet, in the minds of CEOs, the living environment does not differ drastically between the best and worst states. Texas and Nevada, ranked as the best two states, got B's on their report card, while California, ranked as the worst state, received a B-. Neither do more business-related concerns like workforce quality seem to determine a state's rank. Though California received a B- in this area, Nevada also received a B-, and Texas received only a B. The real deal-breaker was taxation. For example, Texas and Nevada scored a B+ and an A- respectively on taxation, while California got a D.

Some CEOs expressed concern over states that have a culture of taxation rather than innovation. "States that hinder the ability of a company to create jobs and serve its customers will lose in the long run," said Edward M. Kopko, CEO of Chief Executive Group. "CEOs are aware of which state governments are and are not friendly towards business, and they are not afraid to shift their resources accordingly." To this end, the top 3 states ranked by CEOs are growing at a yearly average of 4.6% over the past 5 years, almost 2% above the national average of 2.7%. On the other hand, the worst three states have been growing at an average of 2.1%.

The CEO Confidence Index normally is released on the third Tuesday of each month. For additional information regarding the confidence of public- and private-company CEOs, details about regional CEO attitudes on employment, investment and business conditions, as well as confidence differences between service and non-service industry CEOs, visit our full report at http://www.chiefexecutive.net/ceoindex.

Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 210,000. Chief Executive Group facilitates "Chief Executive of the Year," a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award's 20-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers.

	Jan 07	Change from Prev Month
CEO Index	162.0	(3.2)
Current Confidence Index	202.1	(6.2)
Future Confidence Index	134.9	(1.2)
Business Condition Index	176.6	(3.9)
Invest Confidence Index	137.5	(6.7)
Employment Confidence Index	177.4	2.0

Chief Executive's CEO Best & Worst States to do Business

State	Rank 2007	Rank 2006	Rank 2005	Change 2007-06
Texas	1	1	1	0
Nevada	2	2	2	0
Florida	3	4	3	1
North Carolina	4	3	5	(1)
Arizona	5	6	4	1
Georgia	6	5	6	(1)
Tennessee	7	11	7	4
South Carolina	8	12	8	4
Virginia	9	7	9	(2)
Delaware	10	13	11	3
Colorado	11	10	10	(1)
Utah	12	20	13	8
Indiana	13	9	14	(4)
Idaho	14	18	33	4
New Hampshire	15	15	15	0
New Mexico	16	24	23	8
Minnesota	17	38	12	21
Iowa	18	17	22	(1)
Kentucky	19	33	19	14
South Dakota	20	23	28	3
North Dakota	21	28	41	7
Nebraska	22	19	27	(3)
Alabama	23	25	24	2
Kansas	24	14	16	(10)
Missouri	25	41	21	16
Oklahoma	26	31	18	5
Montana	27	37	44	10
Washington	28	16	31	(12)
Wyoming	29	30	35	1
Arkansas	30	26	32	(4)
Alaska	31	32	46	1
Connecticut	32	35	40	3
Wisconsin	33	29	26	(4)
Rhode Island	34	34	29	0
West Virginia	35	44	30	9
Maryland	36	21	25	(15)
Pennsylvania	37	27	43	(10)
Maine	38	36	34	(2)
Hawaii	39	39	47	0
Illinois	40	8	17	(32)
Oregon	41	42	39	1
Ohio	42	22	20	(20)
Mississippi	43	40	42	(3)
Vermont	44	43	36	(1)
District of Columbia	45	45	48	0
New Jersey	46	46	37	0
Michigan	47	48	45	1
Louisiana	48	47	38	(1)
Massachusetts	49	49	4

Articles:   • CEO Confidence Index August 2010   • CEO Confidence Index July 2010   • CEO Confidence Index June 2010   • CEO Confidence Index May 2010   • CEO Confidence Index April 2010

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