The confidence level of chief executive officers remained unchanged at 43 in the second quarter of 2019, but declined to a reading of 34 in the third quarter (a reading of more than 50 points reflects more positive than negative responses), according to a study released by The Conference Board, New York.

Results from this study, “Measure of CEO Confidence,” indicate the lowest reading since Q1 2009 when the measure was at 30.

“CEO confidence declined to its lowest level in a decade,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Tariffs and trade issues, coupled with expectations of moderating global growth, are causing a heightened degree of uncertainty. As a result, more CEOs than last year say they have curtailed investment. In a separate poll of CEOs and CFOs (conducted in September), we found that a large majority believe the recent trade disputes will have a lasting impact on their business.”

CEOs have grown more pessimistic about current economic conditions, with only 8% saying conditions are better compared to six months ago, down from 13% last quarter. Close to three-quarters say conditions are worse, up from 42% in Q2. CEOs were also more negative about current conditions in their own industries compared to six months ago. Currently, only 15% say conditions are better, down from 21% last quarter. Close to two-thirds say conditions are worse, up from about one-third in Q2.

Looking ahead, CEOs’ expectations regarding the economic outlook deteriorated further. Now, just 4% anticipate economic conditions will improve over the next six months, down from 13% in the second quarter. Meanwhile, 67% expect economic conditions will worsen, up from 44% last quarter. CEOs’ expectations regarding short-term prospects in their own industries over the next six months were also more pessimistic. Now, only 13% anticipate an improvement in conditions, down from 17% last quarter. Those conditions expected to worsen in the short-term actually rose from 38% last quarter to 56% in Q3.

Global outlook more pessimistic

CEOs’ assessment of current global conditions continues to weaken. For examples, CEO sentiment declined sharply for China and Europe, and to a lesser degree for the United States. The escalation in trade and tariff tensions and Brexit are likely contributing factors. Sentiment for India, Brazil, Japan and the United States were moderately more negative.

Looking ahead, CEOs are considerably more pessimistic about short-term growth prospects in the United States, China and Europe. Sentiment regarding the outlook for Japan, India and Brazil also declined, and the outlook for both developed and emerging markets remains negative.

Companies scale back capital investment plans in 2019

About 21% of CEOs report increasing their companies’ capital spending plans since January, while the same proportion claimed to have scaled back spending, with cuts more pronounced among manufacturing firms. In 2018, 35% of respondents had increased their capital spending plans and 10% of respondents made cuts. A decrease in expected sales volume was the most common reason given for scaling back capital investment plans.

Impact of U.S-China trade dispute likely to have lasting impact on businesses

About 63% percent of CEOs and CFOs say their business has been, or will be, impacted by the U.S.-China trade dispute, according to a separate poll conducted by The Conference Board in September.

The most anticipated outcomes, according to 64% of respondents, are negative impacts to both sales and profits. More than half of those surveyed expect upward pressure on costs. One-third say they already have, or plan to, pass along price increases to their customers. Similar to results seen in the survey, the impact has been greater among companies in the manufacturing sector.

Looking forward, more than half of respondents expressed very little or no confidence that the U.S.-China trade dispute will gradually abate or be resolved without long-term damage to their business.