In the immediate aftermath of the COVID-19 pandemic, American business leaders expressed optimism for where the economy was headed. But labor shortages, supply chain issues, and resurgent fears about the virus have dampened that enthusiasm.
A wide-ranging article that appeared on the website www.chiefexecutive.net cites the results of a recently-conducted survey of CEO sentiment forecasting worsening conditions in 2022. The confidence poll, which is conducted monthly, is said to be America’s largest monthly survey of chief executives. The survey conducted in early October included over 300 CEOs who saw overall conditions having moderately improved from the previous month, but whose hopes for the coming year were slightly diminished from the previous month, as illustrated in the chart below.
Last April the forecast for business conditions had reflected rising hopes for improved conditions based on vaccination adoption, but since that time they’ve been chilled by inflationary concerns, reports of stalled supplies, and challenges of hiring. According to software developer isee systems’ co-president Karim Chichakly, “Supply chain disruptions in conjunction with labor shortages have caused inflationary pressures that are slowing down the economy. Federal spending, both current and upcoming, will add to those pressures. Interest rates will have to rise, further slowing down the economy. The pandemic will still be with us next year with all the uncertainties that it brings with it.”
Others whose comments were published on the website echoed his concerns, with David Castellini, CEO of Nevada financial services firm Note Funding Center providing a rundown of reasons for pessimism. “COVID implications; uneconomical government proposals; consumer malaise; global economic softening; continued supply chain issues; Federal Reserve missteps.” Still, he expects that 2022 will see improvement.
Though misgivings were blamed on many factors, many pointed to the labor shortage as having the biggest impact on their expectations. Kirk Jefferies, CEO of Texas-based food retailer Lunch Mony said that the “lack of employees to run business at 100 percent” will be a problem that will increase in 2022. Others pointed to inflation and tax rates. Despite misgivings on several fronts, a small number of CEOs still have hopes for a quick rebound, including Denise McIntosh, CEO of Missouri-based industrial manufacturer Custom Powder Systems, who is predicting that once the current supply chain and labor issues are addressed, the situation will improve quickly, and the CEOs’ confidence level does not diminish their expectation that their profits will stay steady and that revenues will increase over the next year. The website’s October survey revealed a rising expectation that capital expenditures would increase over the next 12 months, an increase of 9 percent over September’s survey.
A deeper dive into the survey’s specifics reveals industry-specific shifts in outlook, with CEOs from the pharma and consumer manufacturing field losing confidence by double digits based on labor shortages and supply chain issues, while tech CEO outlooks increased by 8 percent. Travel CEOs are enthusiastic about the future, voicing a 20 percent boost in confidence month-over-month. They attribute their optimism to rising vaccination levels.
About Frank Jenkins Jr
Frank Jenkins Jr. CPA is the managing partner of Adams, Jenkins & Cheatham, a CPA practice based in Midlothian, VA. Frank specializes in Consulting services, tax planning, audit & assurances. "I genuinely care about our clients because I have a personal connection with them." He is active in the community and belongs to the AICPA and the VSCPA.
