Backlash over regulatory restraint.

THE BUMP IN CEO CONFIDENCE, just shy of three percentage points, could hardly be called a resounding note of optimism. In fact, with the rise of Future Confidence even smaller, at two points, corporate leaders appear to be, at best, ambivalent about where this country's economy is headed.

One thing they are not undecided about, however, is the impact of the current regulatory environment on U.S. competitiveness. Nearly 80 percent of survey respondents said existing laws and regulations put U.S. companies on unequal footing vis-a-vis their global competitors. CEO comments reflected deep frustration with how government views business and with laws that impose burdens far outweighing their intended benefits. "The amount of money spent to comply with regulatory requirements has reached an absurd level and will not result in better governance, but in higher prices and more inflation as the cost is passed to consumers," complained David H. Brooks, CEO of Stock Yards Bank & Trust Co. in Louisville, Ky.

"The interpretation of what is legal changes without notice," added Ed Mullaney, president of the Rocky Mountain Machine Shop in Salt Lake City. "We find out after Spitzer or the SEC files charges against a company or individuals. It is tough to operate and make decisions with a legal system that changes like the weather."

Other CEOs charged that small and mid-cap companies are disproportionately disadvantaged by the regulatory burden. The CEOs of those companies "need to sound off in all available forums about the significant internal and external costs involved and the relatively meager benefits and seek redress," said Bemard G. Rethore, chairman emeritus of Flowserve, based in Irving, Tex.

Respondents seemed to agree that corporate leaders must become more vocal. "CEOs need to unite by forming an organization," suggested Dimitri Kanavos, CEO of Los Angeles-based Bluepoint International, "and placing lobbyists in Washington, so they can more effectively voice their opinions on the changes that need to be made."

The other major indices edged up slightly, with the highest increase in Current Confidence, which rose 4.1 points to 177.3. In keeping with a yearlong trend, the outlook for three months' out continued to lag Current Confidence, this month by 25.2 points. Uncertainty about the election may have been a contributing factor.

RELATED ARTICLE: THE NUMBERS

[GRAPHIC OMITTED]

Regulations Hinder

What has been the effect of the current legal and regulatory environment
in the United States?

Helping American competitiveness        3.9%
Hurting American competitiveness       79.5%
No effect                              16.6%

Note: Table made from pie chart.