Executives’ Confidence In The US Economy Has Fallen – Global Outlook Unchanged.

The confidence of US executives in their economy plummeted over the past three months, according to the latest McKinsey Global Survey of Business Executives. The confidence of executives overall in the global economy was unchanged: more of our respondents are upbeat than not, by a small margin. But significant shifts occurred at the regional level; executives in China and in other developing markets (with the exception of India) also reported declining confidence in their country’s economy.

This survey reflects the views of more than 5,800 executives from 128 countries. It was conducted just after Hurricane Katrina hit the US Gulf Coast. The destruction caused by hurricanes Katrina and Rita halted oil and natural-gas production and refining throughout the region for several weeks, resulting in a price spike for oil on the global market.

Corporate resiliency.

The survey also asked executives about their company’s performance over time and their corporate capabilities, investments in innovation, and crisis-management tools. Premium Members can find details on these and additional survey findings by clicking on the download PDF icon in the toolbar above.

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US-based executives have generally been among the more optimistic in our surveys: when asked in March how they felt about the economy 6 months hence, a majority—an index of 59—were very confident. For this survey, when asked about current conditions versus those six months ago, this same group registered a confidence level of 44—the lowest since we began measuring it 18 months ago and the lowest of any group of executives in the world.

US executives, however, are much more upbeat about their own industries. Their confidence fell, but remains only somewhat lower than it was six months ago. US executives’ confidence in their industries is similar to that of executives in the rest of the developed world.

Respondents from China and other developing markets (with the exception of India) also grew significantly less confident about their national economies over the past six months. Executives from India, whose position changed little over this period, remain more confident about their national economy—where growth has been strong—than are executives anywhere else in the world.1

Finally, global executives have changed their hiring plans little in the past three months. Twice as many—36 percent—say that they will increase their company’s workforce as say they will decrease it. Smaller companies are the most likely to be adding employees, while the largest are more likely to decrease their workforce.

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Notes

1For more on India, see Erica J. Bever, Elizabeth Stephensen, and David W. Tanner, “How India’s executives see the world,” The McKinsey Quarterly, 2005 special edition: Fulfilling India’s promise, pp. 38–45.