B U S I N E S S P U
CEOs in NEWi are slightly more Perception of conditions within
confident today than they were
at the end of last year according to
the latest The Nicolet Bank Business
Pulse©. While CEOs indicate the last
three months have been some of
their most challenging in years,
they are more optimistic today.
Today, The Nicolet Bank Business
CEO Pulse Index stands at 93.8 - up
slightly from 91.7 at the end of 2007.
Confidence While the Index remains below its
100-point baseline, the good news
is: CEOs seem to say they’re more
Up Slightly optimistic today. The Current
Conditions Index is down to 83 -
nearly four points from its previous
all-time low at the end of Q4/07 -
but The Future Expectations Index
improved slightly to 104.5-from-96.6
at the end of Q4/07.
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.
Current Conditions
CEO perception of general economic
conditions continues to be the
most significant negative element
in the Current Conditions Index.
In January, 1% felt economic
conditions had improved and
59% indicated that conditions had
declined for a net balance of negative
58 points. However, by the end of
the first quarter this year, the net
Executive Summary:
End of Q1/08 balance of positive-to-negative views
had ‘narrowed to 48% negative, with
9% saying Economic Conditions
were Better and 57% indicating
they were Worse.
L S E©
their own industry also improved
from a net negative 33 to a net
negative 24. The net balance of
positive-to-negative views of
economic indicators that relate
directly to their own company
(gross revenues, net profits, capital
spending, employment) all were
down somewhat: gross revenues
down from +12% to +1%; net profits
down from +11% to a –1%; capital
spending down from +7% to a –16%;
and number of employees down
from a +6% to a +3%.
PAST 3 Months CEOs say:
say:
General Economy
9% Better | 57% Worse
Industry Economy
15% Better | 38% Worse
Revenues
32% Increase | 30% Decrease
Profits
32% Increase | 33% Decrease
Capital Spending
19% Increase | 34% Decrease
Employment
23% Increase | 20% Decrease
Future Expectations
Optimism regarding the economic
future increased for the first time
since Q4 2006. The Future
Expectations Index improved from
96.6 at the end of the year to a
current reading of 104.5. This may
signal that CEOs believe economic
conditions have bottomed out.
(The Future Expectations Index
peaked in Q4/03 at 147.4.)
 NEXT 3 Months CEOs see:
General Economy
16% Better | 29% Worse
Industry Economy
20% Better | 18% Worse
Revenues
35% Increase | 17% Decrease
Profits
36% Increase | 18% Decrease
Capital Spending
22% Increase | 23% Decrease
Employment
31% Increase | 14% Decrease
Seventy percent of the CEOs think
a recession is either: Very Likely
(36%) or Moderately Likely (34%)
in the U.S. in 2008. 24% say they
think a recession is Somewhat
Likely and 6% say it is Not Likely.
These are significant increases from
January when 46% indicated they
thought a recession was either Very
Likely (12%) or Moderately Likely
(34%). Sixty-four percent say they
are Very Concerned (29%) or
Moderately Concerned (35%) 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; 28% are Somewhat
Concerned and 8% indicate that
they are Not Concerned at All.
The level of concern over these
issues is up slightly from January
when 59% were either Very or
Moderately concerned about these
issues having a negative impact
on their business.
National Comparisons
The Conference Board Measure of
CEO Confidence continued to slide
to 38 - down from 39 at the end
of the fourth quarter. This is the
lowest CEO National Confidence
measure since Q4/2000.
The Conference Board Measure is
based on interviews of 100 CEOs;
a score of 50 indicates the same
percentage of positive and negative
responses. Hence, the Conference
Board measure is similar to The
Nicolet Bank Business Pulse©
where a score of 100 means an
equal percentage of positives
and negatives.
The Conference Board Measure
of Consumer Confidence dropped
substantially from 87.9 in January to
62.3 last month. (The Conference
Board tracks this monthly.)
Consumer confidence is a critical
measure since consumer spending
accounts for over two-thirds of
the economic activity in the U.S.
Lynn Franco, economist for The
Conference Board, indicated that
the decline in consumer confidence
is due to the job market, business
conditions and consumers concern
for inflation in the face of rising gas
prices. Another significant finding
in the Consumer Confidence survey
is that the percent of consumers
planning to take a vacation in the
next six months dropped to a 30
year low! The recent passage of the
national economic stimulus package,
and the actions of the Federal
Reserve Board, may have actually
signaled a more negative view of the
economic conditions to consumers.
The May, 2008 Consumer
Confidence Index reported by
Reuters/University of Michigan
showed the lowest level of consumer
confidence since June 1980.
Investment Opportunities
There was little change in attitudes
about investments among CEOs:
27% (34% in Q4) say they are
Bearish with their personal
investments and money
management; 14% (15% in Q4)
say they are Bullish. It appears that
CEOs may be shifting some of their
investments away from real estate
and into the money market to sit
and wait. The Nicolet Bank
Business Pulse© asked CEOs how
they would invest $100,000 of
their own money today: $41,005
($42,541 in Q4) would be in stocks;
$20,202 ($25,305 in Q4) in real
estate; $22,546 ($16,292 in Q4) in
money market; $9,710 ($10,655 in
Q4) in bonds; and $6,537 ($5,207
in Q4) in Treasury bills. Top stock
picks include: Proctor & Gamble,
General Electric, Integrys, Citicorp,
Microsoft and a variety of oil stocks.
Summary
There are indicators at the national
level that more bad news is yet to
come, but CEOs in NEWi are a little
more optimistic about the future
than they have been for the last
year. And, they continue to be more
optimistic than CEOs nationally.
Perhaps the fact that CEOs in
NEWi have just come off a first
quarter that they viewed as
especially challenging gives rise
to their optimism about the next
three months! However, their
concern about the condition of
the U.S. economy remains, and
there are some growing signs
that CEOs are less positive about
how their company is weathering
current conditions.

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; 18% retail trade; 4% wholesale
trade; 6% finance, real estate, insurance; 5% in transportation, communications, utilities;
9% in other industries. 21% have fewer than 6 employees; 28% have 6-25; 19% have 26-50;
13% 51-100; 12% 101-250; 4% 251-500; 2% 501-1,000; 1% have 1,001 or more.
QUESTIONS to Dr. David G. Wegge (920) 217-7738; david@intellectualmarketing.com