PwC decided to analyse the responses received each week during their 2009 CEO Survey to establish just how CEOs reacted to different economic events. Their findings reveal a steadily increasing gloom. In early September, most CEOs were still relatively sanguine; only 29% were extremely concerned about the prospect of a downturn in the world’s major economies. But with the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America on September 15, the level of anxiety soared.
Between 46% and 49% of the CEOs that PwC interviewed during the first three weeks of October were deeply worried about the prospect of a global recession – a fear that persisted even when the G7 nations announced a five-point plan to unfreeze the credit markets on October 11. In late October, news that China’s economic growth had fallen below 10% proved conclusively (if any doubts still remained) that the emerging markets were suffering, too.
Barack Obama’s election as president of the US, on November 4, briefly improved sentiment; the percentage of CEOs extremely concerned about the state of the global economy fell to 37% that week. But the respite was very short-lived. On November 6, the British Chambers of Commerce announced that the UK was in recession. By the end of the month, the euro zone economies, Japan and the US were also formally in recession, leaving between 36% and 44% of CEOs seriously worried about how to weather the storm.
Anxiety about some of the other issues that have recently featured prominently in boardroom discussions dwindled. Between 21% and 29% of the CEOs PwC interviewed in September were extremely concerned about energy prices, for example. Between 17% and 21% were also extremely concerned about the scarcity of natural resources. In late November, by contrast, the percentage of CEOs worried about energy prices and natural resources had dropped to single digits, although lower commodity prices probably helped to allay their concerns. Between early September and the end of November, petroleum spot prices more than halved. The global iron ore spot price also fell from approximately US$150 to US$70 a tonne.
The battle for brains slid equally rapidly down the corporate agenda. Forty-two percent of the CEOs PwC surveyed in early September were seriously concerned about the availability of key skills but, by late November, the figure had shrunk to just 11%. Rising unemployment may have played a part in changing the priorities of some CEOs. In the three months to the end of November, the percentage of unemployed civilians in the US population rose from 6.2% to 6.8%.
The level of unemployment is increasing elsewhere, too. The number of people out of work in the UK has soared to more than a million for the first time in seven years, while the number of jobless in China is thought to be well above the official figure of 8.3 million, following the closure of an estimated 670,000 small firms in the wake of the global financial crisis.
For more details on the Global CEO Survey: