Confidence ebbing, CEOs support Bush, but...

AS CEOs CONFRONT the prospects of terror, spiraling health care costs, high oil prices, softness in consumer spending and job growth and the presidential election, it's perhaps no surprise that their confidence dipped in August. After reaching a record high in July, the benchmark CEO Confidence Index fell 7.7 points in August to 169.7. What is more alarming in some ways is that, for the eighth month in a row, CEOs believe current business conditions are dramatically better than future business conditions (see chart, left). That is a stark reversal from preceding months when CEOs saw better prospects on the horizon.

Of all the things that worry CEOs, we discovered in July that health care ranks as the No. 1 priority. That polling took place before the most recent terrorist alerts, but clearly the results signal how important the issue has become (see chart, middle).

It's certainly no surprise that the majority of our 358 respondents feel President Bush is better prepared than Democratic challenger John Kerry to manage the nation's affairs (see chart, right). The only issue on which Kerry even came close was health care, where 47.5 percent of respondents said he would deal with that issue more effectively. But Bush still was seen as the better choice on health care, with the backing of 52.5 percent of respondents.

Bush has solid support among many CEOs. "George Bush has done a phenomenal job of balancing home front and abroad issues," wrote David F. Leon, CEO of LJC Inc., a maker of exercise software for athletes in Orlando, Fla. "No president since the days of Roosevelt has had to face such tough challenges."

Added Michael R.A. Wade, president of China Trade Development in Los Angeles: "President Bush, to the good, has radically changed America's foreign policy. He has established a doctrine of preemption and a goal of spreading democracy."

But many CEOs are sour on the economy, even if they support the incumbent. "Bush continues to ignore the fallout from our huge trade deficit," wrote Art Mann, chief executive of Donsco, a foundry and machining company in Wrightsville, Pa. "My company is suffering from a 'free trade' policy that allows other countries to manipulate their currencies and erect trade barriers and tariffs. I am at a serious disadvantage when a Chinese product arrives with only a 2.5 percent duty."

Others proclaim a curse on both houses. "Neither candidate has discussed the country's systematically weak education system, a business climate heavy with regulatory and tax burdens and a visa policy that discourages the brightest foreign minds," wrote George Frangos, principal at GFA Engineering Systems in Columbia, Md.

The biggest single rap CEOs seem to have against Kerry is his leadership style. "Kerry vacillates too much and appears to be naive in some of the comments he makes about job creation, outsourcing and developing a coalition to help with world security," commented J. David Smith, CEO of Euramax International, in Norcross, Ga. There's little doubt about how most CEOs will be voting in November. (For more, see "Final Word," page 72.)

RELATED ARTICLE: THE NUMBERS

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Which candidate will deal with the issues most effectively?

                                       Bush   Kerry
Health care                            52.5%  47.5%
Terrorism/Homeland Security            82.7%  17.3%
Taxation                               81.9%  18.1%
Job Creation                           70.2%  29.8%
Energy                                 63.3%  36.7%
International Trade                    70.7%  29.3%
Global Labor Sourcing                  67.8%  32.2%
Tort Reform                            80.8%  19.2%
The Economy as a Whole                 74.9%  25.1%

Note: Table made from bar graph.