The Conference Board Measure of CEO Confidence, which had declined in the second quarter, fell further in the third quarter. The Measure now stands at 42, down from 55 last quarter (a reading of more than 50 points reflects more positive than negative responses).  

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "CEO Confidence has declined substantially in the last two quarters and is now at its lowest level in over two years. Clearly, this prolonged period of slow growth is taking a toll on confidence, and expectations are that these lackluster conditions will persist through early 2012."

CEOs' appraisal of current economic conditions turned even more pessimistic, with only 11 percent saying conditions are better compared to six months ago, down from 33 percent last quarter. In assessing their own industries, business leaders were also considerably more pessimistic. Now, about 19 percent say conditions have improved, compared with 40 percent in the second quarter of 2011.      

CEOs' optimism about the short-term outlook also deteriorated sharply. Currently, about 19 percent of business leaders anticipate an improvement in economic conditions over the next six months, down from 43 percent in the second quarter. Expectations for their own industries are also quite negative, with approximately 22 percent of CEOs expecting conditions to improve in the months ahead, down from 44 percent last quarter.  

Moderate Changes in Capital Spending Plans

Twenty-three percent of business executives report scaling back on their companies' capital spending plans since January of this year, while 22 percent have increased spending, based on a supplementary question asked each year in the third quarter. Last year, 30 percent of respondents had increased their capital spending plans and 20 percent had made cuts. Among the reasons given for increasing capital investment plans, the most common was an increase in sales volume. A decline in sales volume was also the most common reason for decreasing spending plans.

Survey results were fielded from mid-August to mid-September