Inflation, High Interest Rates Weigh on Small, Midsize Company CEO Confidence

CEOs of mini and midsize companies are emotion little assured astir nan system than they were earlier this year.

The Vistage CEO Confidence Index stood astatine 83.3 for nan 2nd quarter, falling from 85.9 successful nan first quarter. The diminution successful assurance is partially a consequence of inflation and elevated liking rates, Vistage said. To tamp down grounds inflation, nan Federal Reserve has hiked rates from near-zero to much than 5% successful nan past 2 years. 

CEOs Believe Inflation, Rate Hikes Have Negatively Affected Their Companies

The mostly of CEOs (64%) surveyed said that elevated interest rates were hitting their businesses. Despite this, 60% still expect accrued gross successful nan adjacent 12 months. 

While ostentation has cooled, from much than 9% successful nan summertime of 2022 to 3% now, businesses are still emotion nan effects of higher prices, whether it’s from costlier labour aliases earthy materials expenses. Fifty-nine percent of respondents said nan biggest root of ostentation affecting their business was labor, 12% believed it was earthy materials, 9% thought it was equipment, and 8% chalked it up to higher services costs.

Although nan CEOs said labour costs were up, galore didn’t expect shrinking their company’s workforce. Only 10% thought that nan full number of labor astatine their patient would diminution successful nan adjacent 12 months.

Many CEOs Say They Are Boosting Investment successful AI Capabilities

When looking to nan future, respondents were optimistic astir AI and its imaginable to summation worker productivity—nearly one-third of nan CEOs successful nan Vistage study said they were expanding their spending connected AI. However, nan mostly of respondents (55%) said they were making nary changes to their AI budget.

For immoderate CEOs, AI isn’t conscionable a instrumentality for nan future. Some already are utilizing it astatine their companies: 49% opportunity they usage it for income and marketing, 33% for improved operations efficiency, and 23% for customer service.

Vistage is an executive coaching institution for mini and midsized businesses that has measured nan assurance of smaller-companies' apical executives astir nan U.S. system since 2003 pinch its quarterly CEO assurance index.