B U S I N E S S P U
Not since Nicolet Bank began Current Conditions
tracking CEO confidence six years
ago has The Nicolet Bank Business
Pulse© been so low. Due, primarily,
to how CEOs view economic
conditions over the past three
months as well as their confidence
in future conditions, The Index
CEO reached its all-time low last quarter.
At 91.7, The Nicolet Bank Business
Confidence Pulse was down almost six points
from the end of Q3/07. It marks the
Continues second successive quarter The Index
has fallen below the baseline of 100,
indicating there are more negative
Cascade than positive views.
The Nicolet Bank Business Pulse
measures current economic
conditions compared to three
months ago - as well as expectations
of CEOs over the next three months.
The Current Economic Index and
The Future Expectations Index are
then combined into the overall
Business Pulse Index. Scores higher
than 100 indicate more positive than
negative responses; scores lower than
100 indicate more negative responses.
(The Pulse© reported its highest
point in Jan ‘04: 137.4.)
The Current Conditions Index
dropped 11 points to 86.8 at the end
of December – down from 97.8 at the
end of September ‘07. The Future
Expectations Index declined only
slightly from 97.1 in Q3/07 to 96.6
at the end of Q4/07.
Executive Summary:
End of the Fourth Quarter,
2007
“I’m not getting information; I'm not managing.”
John Torinus, President & CEO — Serigraph, Inc
L S E©
CEO perception of economic
conditions continue to be the most
significant negative element in the
Current Conditions Index. At the end
of the Q3/07, 14% felt economic
conditions had improved and 46%
indicated that conditions had
declined for a net balance of negative
32 points. However, by the end of
Q4/07, the net balance of positive-
to-negative views had widened to
a negative 58%. (Only 1% said
conditions improved; 59% said
conditions had declined.)
Perception of conditions within the
CEOs’ own industries also continued
sliding: a net negative perception of
12% in Q2/07; a net negative of 14%
in Q3/07; a net negative again this
quarter to –33%. Economic indicators
of their own company (revenues,
profits, employment and capital
spending) all remain slightly positive.
PAST 3 Months CEOs say:
say:
General Economy
1% Better | 59% Worse
Industry Economy
7% Better | 40% Worse
Revenues
38% Increase | 25% Decrease
Profits
41% Increase | 30% Decrease
Capital Spending
28% Increase | 21% Decrease
Employment
21% Increase | 15% Decrease
Future Expectations
Optimism regarding the economic
future declined only slightly at
the end of Q4/07. The Future
Expectations Index dipped to 96.6
at the end of Q4/07 – from 97.1
at the end of the third. While the
decline was minimal, it does mark
the lowest point since the Nicolet
Bank began tracking Future
Expectations in Q4/01. (The Future
Expectations Index reached its
peak in Q4/03 at 147.4.)
NEXT 3 Months CEOs see:
General Economy
10% Better | 36% Worse
Industry Economy
19% Better | 28% Worse
Revenues
39% Increase | 17% Decrease
Profits
34% Increase | 24% Decrease
Capital Spending
25% Increase | 28% Decrease
Employment
23% Increase | 13% Decrease
Forty-six percent think a recession
is either Very Likely (12%) or
Moderately Likely (34%) in the U.S.
in 2008; 29% say it is Somewhat
Likely; 8% think a recession is Not
Likely. Fifty-nine percent indicate
they are Very Concerned (21%) or
Moderately Concerned (38%) that
issues such as the mortgage crisis,
unemployment, the credit crunch
and the decline in the stock market
will have a negative impact on
their business; 29% are Somewhat
Concerned and 11% indicate that
they are Not Concerned at all.
National Comparisons Business Pulse© asked how CEOs
would invest $100,000 of their own
Released last month, The
money today: $42,541 would be
Conference Board Measure of CEO
in stocks; $25,305 in real estate;
Confidence fell to 39; down from
$16,292 in money market; $10,655
44 at the end of the third quarter.
in bonds; $5,207 in Treasury bills.
It marked a seven-year low for the
Top stock picks include: Proctor &
Conference Board’s measure.
Gamble, General Electric, Integrys
The current condition index for and Microsoft.
CEOs nationally decreased from
39-to-34; future expectations
dropped from 44-to-40. The
Conference Board Measure is
Summary
based on interviews of 100 CEOs “CEO Confidence” has become
nationally; a score of 50 indicates
the same percentage of positive something of an oxymoron as it
and negative responses. Hence,
has continued to drop over the last
the Conference Board measure
is similar to The Nicolet Bank four quarters. CEOs in NEWi are
Business Pulse© where a score of
100 means an equal percentage obviously concerned about the
of positives and negatives.
condition of the U.S. economy,
The Conference Board Measure
but continue to be more upbeat
of Consumer Confidence also
continued its slide from 95.6-to- about how their own company
90.6-to-87.9 in January ‘08.
(The Conference Board tracks can perform. CEOs across the US
consumer confidence monthly.)
are faced with a plethora of issues
Lynn Franco, economist for The
Conference Board, indicated creating an environment that is,
that the continued decline in
confidence is due to the job to say the least, challenging:
market, business conditions and
Health care, energy, the downturn
fewer consumers having a sense
that their earnings will increase. in the housing market, the decline
Investment Opportunity? in the job market and in consumer
Bullishness among CEOs also confidence continue to fuel
continued its decline by the end
of the quarter: 34% say they uneasiness among CEOs.
are Bearish with their personal
investments and money
management; 15% say they are
Bullish. In Q3/07, 17% were Bulls;
22% were Bears. The Nicolet Bank

How the Study is Conducted

The Nicolet Bank Business Pulse© is a Quarterly Study of CEOs in NE Wisconsin (Brown, Calumet,
Door, Kewaunee, Manitowoc, Marinette, Oconto, Outagamie, Shawano, Winnebago Counties) and
Menominee, Michigan. It is designed and implemented by IntellectualMarketing, LLC.
Participants include: 28% in manufacturing; 25% in services; 19% retail trade; 5% wholesale
trade; 6% finance, real estate, insurance; 5% in transportation, communications, utilities;
6% in construction; 7% in other industries. 23% have fewer than 6 employees; 28% have 6-25;
16% have 26-50; 12% 51-100; 14% 101-250; 4% 251-500; 1% 501-1,000; 2% have 1,001 or more.
QUESTIONS to Dr. David G. Wegge (920) 217-7738; david@intellectualmarketing.com