Director Optimism Continues To Fall Amid Recession Forecasts 

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The latest reading from the Director Confidence Index shows director optimism now down 19 percent since January.

Will the Fed stick the landing? Directors don’t seem to think so.

Corporate Board Member’s latest reading of director confidence in future business conditions, measured on a 10-point scale where 10 is Excellent and 1 is Poor, fell to 5.2 in June. That is a 6 percent month-over-month decline, a 19 percent drop since the start of the year and a 26 percent loss from its June 2021 level. The Index is now 30 percent off its April 2021 high.

Director confidence in current business conditions also fell in June, down 5 percent since prior month and 21 percent off its June 2021 level. The only time the Index has been this low was in the fall of 2020, prior to the announcement of a vaccine for Covid-19.

The Director Confidence Index poll of 185 U.S. public company board members, conducted June 13-16 in partnership with the Diligent Institute, shows optimism in business conditions on a steady decline, with inflation as the primary driver. Polled directors say they’re concerned over the Fed and Washington’s ability to contain these record-high inflation levels, despite the latest three-quarter point interest rate hike—and the potential for a string of aggressive jumps before the end of the year.

The poll fielded through the Fed’s June 15 hike announcement and dropped 5 percent on the news, from 5.4 to 5.2, with some board members saying they doubt the Fed’s ability to successfully tamper inflation and help the country avoid a recession.

“Rising interest environment in the face of high inflationary pressure will broadly dampen demand,” said a director on the board of an oil and energy company, who doesn’t expect economic conditions to begin improving until 12-18 months from now.

“Inflation [is] putting significant pressures on business model, and increasing interest rates [are] reducing the capacity to invest in CapEx/expansion,” said a board member at a home healthcare company.

“[We’re] Just seeing the beginning of responses to inflation. I expect additional responses globally that will raise borrowing costs and slow down growth in the near term,” said an audit committee member at a Nasdaq-listed company.

“High energy cost and inflation will lead to increased demand destruction. Transportation costs have cut deeply into margins in our sector (mining) and broadly impacts most sectors,” said an independent director at an NYSE-listed mining company.

“The Producer Price Index is so high, it will take a long time to bring down prices,” said Thomas Chorman, chair of the nom/gov committee at Standex International Corp and a member of both its audit and comp committees. “Current administration has no idea of how to solve the problem because they don’t admit there is a problem.”

A director who chairs the audit committee at an energy company also cited Washington as a barrier to recovery: “Inflation and the effect on tens of millions of Americans, the Ukraine War and its effect on energy and food supply/prices; and the Biden Administration’s total incompetence,” he said, listing the reasons why he expects business conditions to have deteriorated to a 3 out of 10 by this time next year.

“[There’s] ineffective governmental leadership that unnecessarily restricts business,” said the director of an infrastructure company. “A recession is coming.”

On that issue, however, directors are split: Forty percent project the U.S. economy will experience a full-on recession over the next 3 to 6 months, but 50 percent say they don’t expect the slowdown to cross that line.

“In the Fed’s attempts to tamper inflation, there is a strong likelihood overshooting the mark and causing the country to slip into a recession. The worst outcome would be stagflation where you continue to have high inflation with a recession. That doesn’t need to happen but is a possibility,” said a director in the healthcare industry.

“Inflation [is] leading to recession with no constructive policy response from the administration,” said the comp chair of a chemical company, who forecasts a slowdown—not a recession—for the remainder of the year.

“Stagflation is possible given slow QT by the Fed and massive U.S. debt that will require inflationary dollars to sustain,” said the director of a Nasdaq-listed company. “Utopian green energy projects have created deficit of hydrocarbons needed to run real economies, [and] China’s political climate reduces historical growth hedge for western countries.”

“[There’s a] high risk of economic recession, which will further negatively affect ability to finance innovation and pipeline progress,” said Paul Lammers, MD, lead independent director at Salarius Pharmaceuticals, a cancer-focused biotechnology company.

These findings and comments all align with Diligent Institute’s Corporate Sentiment Tracker, an AI-powered tool which tracks the issues corporate leaders are speaking about most frequently in the news and whether they’re speaking about those issues in a positive or a negative way. Currently, the Tracker’s positivity score is at 54 percent, and the top terms being discussed in the past 14 days were “inflation” and “recession.”

A Host of Concerns

Despite the focus on inflation, companies are simultaneously tackling a wide range of other issues. Directors say there is a continued struggle with supply chain delays, ongoing labor shortages and rising costs in all aspect of business.

And the concerns don’t stop there. The war in Ukraine also continues to weigh on business, along with China’s approach to Covid. Add to that market volatility, record-high fuel prices and a midterm on the horizon, and many directors—much like CEOs earlier this month—say it’s tough to be optimistic about the months ahead.

“We’re in for a rough road overall over the next 2-3 years given this current economic environment and nearer term prospects. There’s a big hole to climb out of,” said the lead director of a drink company, who nevertheless only forecasts a slowdown instead of a recession.

Not everyone pictures a gloomy future, though. Nearly a quarter (21 percent) of directors we polled expect the economic picture to improve by this time next year. While that proportion is down 4 percentage points since May, fewer directors now expect things to worsen (52 percent in June vs. 55 percent in May).

“I don’t see higher interest rates dramatically curtailing demand, so I see a continuation of business as usual. Rates are still at historically low levels,” said a respondent in the healthcare industry.

“Businesses are still generally healthy. Controlling inflation and getting supply chain issues under control will be critical to continue keeping businesses healthy,” said a seasoned director who serves on the board of multiple large multinationals.

“I believe the Fed’s effort to tamp down inflation will start to work,” said an independent director on the board of a bank holding company.

“I think inflation will gradually dissipate, and it is the biggest deterrent to positive business growth and conditions,” said another director in the financial industry.


Overall, fewer directors are expecting profits and revenues to rise in the months ahead. In June, 56 percent of board members said they expected their company’s profitability (EBITDA) to be up by this time in 2023, down 7 percent from 61 percent in May, and -27 percent from where it started the year at 77 percent. This is, by far, the lowest proportion on record.

Similarly, the number forecasting increasing revenues dropped to 63 percent in June, down 12 percent month-over-month and down 25 percent year-to-date.

And the proportion of directors forecasting increases in capital expenditures followed suit, down to 32 percent, adding another 3 percent decline to the previous month’s 25 percent drop. Only 32 percent of directors now plan for increases in capital expenditures over the course of the next 12 months. That number is down 47 percent since January.

About the Director Confidence Index

The Director Confidence Index is a monthly survey of public company board members on the state of the overall economy, the outlook for business and other topical issues impacting public companies. Conducted in collaboration between Corporate Board Member and Diligent Institute, the Index benchmarks confidence among the governance community and is a forward-looking indicator of market movements and corporate strategies.

About Corporate Board Member

Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq.

About the Diligent Institute

Diligent Institute is the corporate governance research arm and think tank of Diligent Corporation. The Institute produces publicly available cutting-edge research on corporate governance practices by directors, for directors, with a global perspective. Learn more at

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