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Optimism Rebounds In Q1 2013 Vistage CEO Confidence Index

SAN DIEGO, April 3, 2013 /PRNewswire/ -- CEOs reported an improved economy and brighter prospects for their own firms despite recent cutbacks in federal spending, in the Q1 2013 Vistage CEO Confidence Index. The Confidence Index was 96.6 in the 1 st quarter 2013 survey, up from 87.0 in the prior quarter and the highest level since last year's 105.1. The underlying strength in the economy has begun to shift the attention of CEOs from uncertainty about federal policies to the more traditional concerns of small firms centered on revenue growth, controlling costs, and staffing.

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The recent sequester will be a drag on economic growth, with one-in-six firms anticipating that the cutbacks in federal spending will adversely affect their own business. Importantly, few CEOs expect any resolution to the basic fiscal issues facing the country. Eight-in-ten firms expected continued uncertainty about federal policies during the year ahead. Although firms are learning how to cope with heightened uncertainty, it is always more easily handled in an expanding economy than in an economy verging on stagnation. Overall, confidence and GDP growth has moved sideways during the past few years, with the temporary variations reflecting the repeated bouts of fiscal crises and resolutions.

Economic Growth Improves. Over the past six months the proportion of CEOs that reported an improved pace of economic growth has nearly doubled. In the 1st quarter 2013 survey, 49% reported improved economic conditions, up from just 27% in the 2nd quarter of 2012. Firms also held more favorable expectations for economic growth during the year ahead. Among all firms, 36% anticipated continued improvements in the national economy in the 1st quarter, up from 26% in the prior quarter. Importantly, CEOs can be described as cautiously optimistic since their judgments about both the current economic performance and the year-ahead outlook for the economy are still below the levels recorded a year ago.

Improved Hiring Plans. Net hiring plans, after falling in the prior three quarters, posted a solid gain.

Among all firms, 52% planned additions to their payrolls in the 1st quarter, up from 45% in the prior quarter, and the highest level since last year's 57%. Just 8% of CEOs anticipated reducing their staffs during the year ahead. It is, however, a significant challenge for firms to find, hire, and train appropriate staff.

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