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Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Factory thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Factory thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Factory thumbnail
Blog Fleetowner Com Trucks At Work Wp Content Uploads 2012 01 Factory thumbnail

“I’ll take ‘optimism’ for one hundred, Alex”

Jan. 5, 2012

This is not the opinion of pundits or economists; these are the CEOs who are leading our economic recovery and will be responsible for improving the business and employment picture in the U.S. over the next three years. This is a good sign of better days ahead.” –Rafael Pastor, chairman and CEO of Vistage International concerning the increasingly optimistic outlook of executives polled in the firm’s quarterly “confidence” survey.

Make no mistake – times are still tough out there and, as the old saying goes, we ain’t out of the woods yet; not by a long shot.

Still, it’s good to see a sudden surge in corporate optimism of late, despite all the troubles posed by everything from Europe’s sovereign debt-crisis to Iran’s saber-rattling in the Straits of Hormuz as that nation threatens to close that vital oil shipment channel in the face of international sanctions over its nuclear program.

Indeed, folks across the business spectrum seem to be taking one of Winston Churchill’s famous maxims to heart: “A pessimist sees difficulty in every opportunity, but an optimist sees the opportunity in every difficulty.”

One piece of positive news on the economic front comes from the Vistage CEO Confidence Index, which shot up to 98.8 in the fourth quarter last year after precipitous declines during the prior two quarters.

This index, by the way, reflects responses from 1,641 U.S. chief executives, who were polled between Dec. 12 and Dec. 22 last year (which ain’t all that long ago, by the way).

Rafael Pastor, chairman and CEO of Vistage International, added that every component of the confidence index improved, with those CEOs surveyed planning increases in employment and fixed investments as they anticipate higher revenues and profits during the year ahead.

While persistent economic and political uncertainty remains a top concern, mentioned by nearly half of all those CEOs polled by Vistage – fueled by the debt crisis in Europe and the failure of Congress to address the national debt, with two-thirds saying that the national debt had negatively affected their business plans – Pastor said this recent surge in confidence may have longer-term implications, as 49% of the CEOs surveyed believe that in three years, the U.S. will be the most improved economy in the world with China posting 17% and South America at 14%.

That’s some pretty powerful optimism, if you ask me.

“This is not the opinion of pundits or economists; these are the CEOs who are leading our economic recovery and will be responsible for improving the business and employment picture in the U.S. over the next three years. This is a good sign of better days ahead,” Pastor (seen at left) stressed. “Basically, these CEOs are saying that, despite the stalemates in Washington, and the volatility around the world, they and their enterprises will innovate, grow, and hire in the ways the rest of the world can't.”

Here are some other highlights from Vistage’s index:

Economic Growth Rebounds. More than twice as many CEOs thought that the economy had improved in the latest Vistage survey compared with one quarter ago. Improved economic conditions were cited by 41% in the 4th quarter, up from just 18% in the 3rd quarter. Just 12% thought the economy had recently worsened. When asked about prospects for the year ahead, additional economic gains were expected by 40%, twice the 20% recorded in the third quarter. While CEOs were still less optimistic than they were in the closing quarter of 2010, the data signals stronger fourth quarter GDP [gross domestic product] and modest positive growth in the year ahead.

Majority Plan New Hires. Net increases in employment were planned by 55% of all firms in the fourth quarter of 2011. Although only barely above last year's 54%, it was the highest percent that planned job additions since 2007. Just 6% planned net declines in the number of their employees during 2012, scarcely above the all-time low of 5%. However, CEOs were nearly evenly split on whether the recent sharp decline in unemployment represented the start of a sustained trend or just a temporary blip.

Revenue Prospects Improve. Revenue growth was expected by 73% of all firms in the fourth quarter survey, up from 62% in the prior quarter, and much closer to the year ago level of 77%. Revenue expectations were twice as favorable as at the recession low, when just 36% expected higher revenues in the closing quarter of 2008. This recent improvement came despite the expectation by six-in-ten firms that the prices that they would receive for their goods or services would remain unchanged or fall during the year ahead.

Profit Outlook Edges Higher. Increasing profits were anticipated by 55% of all firms in the 4th quarter of 2011, between last quarter's 47% and last year's 63%. While the worst impact of the recession on profits is clearly over (just 9% anticipated declining profits, down from a peak of 36% three years ago), the expectation of higher profits is still well below the peak of 74% in the 4th quarter of 2003.

Investment Strengthens. Planned investments in new plant and equipment were reported by 42% of all firms in the 4th quarter of 2011, the highest level since 48% was recorded at the start of 2011. Just one-in-eight firms reported that they would reduce their fixed investments during 2012. While the number of firms that plan to increase investment spending is well above the low of 18% recorded at the close of 2008, it is still below its peak level of 57% set at the closing quarter of 2005. This commitment of investment funds to secure future revenues underscores these CEOs' expectations of a modestly stronger recovery in 2012.

It’s not just Vistage that’s seeing a renewed burst of optimism in the business world, either.

In a survey of 1,000 independent small business owners conducted by Newtek Business Services last month, some 55% of those polled are optimistic about the future, with a further 64% optimistic about their 2011-year end results. A majority of these business owners believe that, going forward, it will be easier to grow their sales rather than to reduce their expenses, noted Barry Sloane (seen at left), Newtek’s chairman, president and CEO.

“To be frank, we are pleasantly surprised at the optimism that is being generated by over 1,000 of our small business clients,” he explained. “Optimism about their business and the economy and their ability to grow sales has not been apparent in recent months or years. We attribute this optimism to the recent headline drop in the unemployment rate, the growth in consumer spending and small gains in hiring in the fourth quarter.”

Now, Sloane cautioned that whether this optimism will continue to grow or wither in the first quarter of this year is anyone's guess, given that consumer spending growth has not been accompanied by personal income growth.

“Putting that aside, the positive sentiment is clearly a positive sign for the market,” he said. “If independent business owners become positive about the economy and their own businesses they will hire, spend and make capital investments. It is potentially very good news for business going into 2012.”

That’s good stuff, especially as all of that buying, spending, and capital investing could generate more freight for the trucking sector – and truckers can definitely use more of that.

About the Author

Sean Kilcarr 1 | Senior Editor

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