YPO: Global Pulse Survey reports fourth consecutive decline in economic confidence among U.S. CEOs

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The YPO Global Pulse® Confidence Index of CEO economic sentiment for the United States fell 0.8 point in January to 59.1. This is the fourth consecutive decline in confidence, amid continued concerns about the slowdown of the Chinese economy and the precipitous slide in oil prices indicating weaker growth globally.

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GDP growth in the United States is widely expected to be about 2.5% in 2016. Fueled by the combination of sizable employment gains, still low interest rates, little debt and plunging gas prices, consumer spending seems likely to climb 3% this year.

The YPO Global Pulse® Confidence Index of CEO economic sentiment for the United States fell 0.8 point in January to 59.1. This is the fourth consecutive decline in confidence, amid continued concerns about the slowdown of the Chinese economy and the precipitous slide in oil prices indicating weaker growth globally. However, at 59.1, the confidence index suggests that YPO leaders expect the U.S. economy to expand at a moderate pace in 2016.

GDP growth in the United States is widely expected to be about 2.5% this year, but growth is uneven amongst sectors. Strength in consumer spending and housing are being partially offset by softness in the oil sector and trade.

Against a background of moderate growth, significant job creation, and a gradual increase in the inflation rate, it is expected that the Fed will continue on a path towards higher interest rates, with the funds rate likely to reach 1.5% by the end of this year.

The S&P Index fell 12% in the first two weeks of January in the second stock market correction since October. Investment spending in the United States was hit hard in 2015 by the dramatic drop in oil prices, which began in October 2014, and prices reached a low point of about US$28 per barrel in mid-January. The slowdown of the world’s second largest economy of China also seems to have affected global stock prices, as U.S. exports declined about 7% in 2015. Exacerbating the weaker trade outlook is the steady increase in the value of the dollar, which has risen 20% in the past 18 months.

When asked to evaluate economic conditions today compared to six months ago, most YPO respondents believed that the outlook had deteriorated. For example, 28% believed that economic conditions had improved in the past six months; in October, 35% believed that was the case. Similarly, in January, 32% thought they had worsened during that period of time whereas three months ago, only 26% believed that growth had slowed.

“GDP growth in the United States is widely expected to be about 2.5% in 2016. Fueled by the combination of sizable employment gains, still low interest rates, little debt and plunging gas prices, consumer spending seems likely to climb 3% this year. The housing sector should perform particularly well as young adults venture out on their own,” said Joel Montminy, president and CEO of CREO Capital Advisors, LLC and a member of the YPO Hollywood Chapter.

The modest drop in confidence in the United States was countered by slightly improved readings for Asia, the European Union and Latin America. Globally, economic sentiment measured by the YPO Global Pulse Index for the last quarter of 2015 remained relatively stable, landing at 58.0, its lowest level since the third quarter of 2011, at the height of the global economic recession. The European Union remained almost unchanged, edging up to 60.5, making it the world’s most optimistic region. Only Asia, which climbed 2.4 points to 59.7, and Latin America, which jumped 4.8 points to 54.4, recorded any material increase in confidence.

Key Findings in the United States
U.S. sales, employment and investment indexes show healthy outlooks for 2016
The U.S. Sales Index fell 0.6 point to 66.2, which is still a very healthy level and suggestive of relatively robust sales throughout 2016. In terms of employment, confidence rose 0.7 point to 59.4 in January, while the investment index remained essentially unchanged at 60.0 after declining 2.2.points in the prior quarter. Like the other two indexes, the U.S. investment outlook remains healthy.

YPO Global Pulse® Confidence Index
The quarterly electronic survey, conducted in the first two weeks of January 2016, gathered answers from 1,994 chief executive officers across the globe, including 916 in the United States. Visit http://www.ypo.org/globalpulse for more information about the survey methodology and results from around the world.

About YPO
YPO (Young Presidents’ Organization) is a not-for-profit, global network of young chief executives connected through the shared mission of becoming Better Leaders Through Lifelong Learning and Idea ExchangeTM. Founded in 1950, YPO today provides 23,000 peers and their families in 130 countries with access to unique experiences, extraordinary educational resources, access to alliances with leading institutions, and participation in specialized networks to support their business, community and personal leadership. Altogether, YPO member-run companies employ more than 15 million people around the world and generate US$6 trillion in annual revenues. For more information, visit http://www.ypo.org.

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