Business Optimism Index Drops Again

Location: Chicago
Author: Kristi Grgeta
Date: Monday, December 17, 2007
 

Grant Thornton LLP’s Business Optimism Index, a quarterly confidence measure of U.S. business leaders, has dropped from 59.5 in June 2007 to a new low of 54.9 – the lowest it has been since it was introduced in May 2002.

The survey reveals that while overall optimism for individual company growth remains high at 73 percent (17 percent are “very optimistic” and 55 percent are “somewhat optimistic”), the number of pessimistic business leaders continues to rise. The percentage of senior executives that reported being somewhat or very pessimistic about the growth of their business over the next six months has slowly increased over the course of eight surveys, moving from a low of 7 percent in November 2003 to 25 percent in the latest survey.

Executive opinion regarding the national economy has also continued to deteriorate. For the first time, more respondents said that they believe the economy will worsen in the next six months than improve. Twenty eight percent of business leaders believe that the economy will worsen, and only 17 percent believe that it will improve over the next six months. Those that believe the economy will remain the same has held steady at 51 percent.
In the area of hiring, the number of executives who expect their companies to increase headcount over the next six months has decreased since the survey was last conducted in June 2007, from 42 percent to 36 percent. Thirteen percent expect to decrease headcount over the next six months, up from 11 percent.
The Business Optimism Index has been declining more or less steadily since it hit an all-time high of 75.6 in November 2003.
 
 
May 2002
 
June 2007
 
November 2007
Business Optimism Index
75.5
 
59.5
 
54.9
Believe U.S. economy will improve
80
%
 
24
%
 
17
%
Believe U.S. economy will worsen
2
%
 
20
%
 
28
%
Optimistic about own business
92
%
 
80
%
 
73
%
Pessimistic about own business
8
%
 
18
%
 
25
%
Increase staff
46
%
 
42
%
 
36
%

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