THE BUSINESS NEWS

Serving Brown, Calumet, Door, Kewaunee, Manitowoc, Marinette, Oconto, Outagamie, Shawano & Winnebago counties
September 14, 2009 www.thebusinessnewsonline.com Vol. 7, No. 10 $1.00

Confidence of region’s CEOs continues to improve

By David Wegge, PhD
david@intellectualmarketing.com The Pulse of Area Business
The Nicolet Bank Business Pulse improved to
99.9 — up from 80.5 last quarter and from 63.8 the
quarter before — when The Pulse reached its lowest
point since its inception in Quarter 4, 2001.
The 99.9 last quarter is the eighth consecutive
quarter below 100 on the index. The Business Pulse
continues to show more negative views of the economic
conditions than positive ones, but 99.9 is essentially an
equal number of positive and negative views.
The Pulse measures Current Economic Conditions
compared to three months ago as well as Future
Economic Expectations of business leaders over the
next three months. The Current Economic Index and
The Future Expectations Index are then combined into
the overall Business Pulse Index. Scores lower than 100
indicate more negative than positive responses.
In Quarter 2, the Current Conditions Index
improved from 66.8 to 86.6. The Future Expectations
Index increased from 94.2 in Quarter 1 to 113.1, pushing
it above the 100 baseline value for the first time in a year.

Current conditions
The Business Pulse shows marked improvement
on many economic indicators for CEOs in the New
North. While Capital Spending, Employment and
Perception of their Industries Economy remained
negative, Gross Revenue, Net Profits and Perception
of the overall economy all turned slightly positive.
Businesses may have turned the corner on revenue/
profits and made the necessary adjustments to manage
recessionary times. However, the Capital Spending and
Employment indicators are clear: CEOs continue to see
decreases rather than increases in these two key areas.

At the end of Quarter 2, CEOs said:
General economy Profits
26% better 33% increased
25% worse 32% decreased
Industry economy Capital Spending
24% better 11% increased
36% worse 46% decreased
Revenues Employment
39% increased 9% increased
35% decreased 31% decreased
Future Expectations
The Future Expectations Index also continued to
improve — from 94.2 to 113.1. CEOs are more positive
than negative on their views of the future on all economic
indicators except Capital Spending (13 percent more
negative than positive). The General Economy (+26%),
Industry Economy (+16%), Revenues (+25%), Profits
(+30%) and Employment (+3%) were all positive.
For the 3rd Quarter 2009, CEOs predict:
General economy Profits
40% better 46% increase
14% worse 16% decrease
Industry economy Capital spending
36% better 14% increase
20% worse 27% decrease
Revenues Employment
41% increase 13% increase
16% decrease 10% decrease
National comparisons
In the latest Conference Board survey of CEOs
in the U.S., evaluations in Quarter 2 also improved
substantially — up from 30.0 to 55. The Conference
Board Measure is based on interviews of 100 CEOs
nationally; a score of 50 indicates the same percentage
of Positive and Negative responses. The Conference
Board is similar to the Business Pulse where a score of
100 means equal percentages.
On the consumer side, The Conference Board’s
measure of consumer confidence also improved
substantially to 54.1 from 39.2 in April. The base line
for the Consumer Confidence Index is 100.
When the Business Pulse is compared to the S&P
500, the improvement in CEO confidence was matched
by a slight rise in the performance of the S&P 500.
Summary
CEOs in the New North are both substantially
more positive about the past three months and more
optimistic about the next three months. CEO and
business owner views’ on their company’s Gross
Revenue and Net Profits suggests that they have taken
the necessary steps to weather the current recession;
their views on Capital Spending and Employment
indicate that they may be “hunkered down” until the
economy begins a more robust recovery.
In recent weeks, Ben Bernanke, chair of the
Federal Reserve Board and Larry Summers, director
of the National Economic Council have both indicated
that they do not think unemployment will peak until
mid 2010. So, while we do see signs that we are inching
out of this recession, a strong recovery, especially in the
consumer markets, would still appear to be a bit further
over the horizon.

Reprinted with permission of The Business News