Directors’ Outlook For Economy Dims To Pre-Vaccine Levels On Inflation Fears

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Our gauge of U.S. public company board member confidence is now just 3 percent above where it was last fall, before Covid-19 vaccines were released.

Directors’ outlook for the economy in the U.S. declined in June for a second consecutive month and is now lower than it was before the general release of Covid-19 vaccines to the public. Potential corporate tax increases, inflationary pressures and the ongoing labor shortage are the primary reasons a growing number of board members surveyed said they now expect business conditions to worsen over the next 12 months.

Those are the key findings from our June Director Confidence Index, a poll of U.S. public company board members conducted in partnership between Corporate Board Member and Diligent Institute. Our leading indicator dipped further in June, to 7.1 out of 10 on our 10-point scale, from 7.2 in May and 7.5 in April. Directors are far from alone in this opinion: CEOs also lost confidence in future business conditions in May and June, as reported by our sister publication, Chief Executive, earlier this month.

The DCI is now lower than it was in February, when the Covid-19 vaccines were first becoming broadly available. The lifting of Covid restrictions and reopening of businesses are keeping director sentiment in the “very good” territory, despite concerns about potentially unfavorable changes to tax policy, inflation and supply and labor shortages, according to the 109 public company board members polled June 13-16.

Director sentiment about current business conditions gained 6 percent since May, to 7.4/10 from 7/10. That is 6 percent higher than CEO sentiment (6.9/10), which has remained flat since April.

Shaun Burke, executive director at Guaranty Federal Bancshares, expects business conditions by this time next year to have deteriorated from a 7/10 to a 5/10. He says “inflation, regulatory burden and ineffective government leadership will have an increasing drag on the recovery.”

Although Scott Pancoast, director at pharmaceutical company DermTech, expects conditions to improve slightly from 5/10 to 6/10, he agrees that taxes, inflation and government spending “will return with a vengeance, further tempering growth.”

Chris Harned, finance committee chair at marketing firm Quad, says current consumer confidence and the overall economic recovery will be “tempered by inflationary and political concerns.” He is among the 24 percent of respondents who expect conditions to remain unchanged over the next 12 months.

A growing proportion of directors, however, now project conditions to worsen: 40 percent of polled board members in June predicted deteriorating conditions by June 2022, compared to 15 percent at the beginning of the year.

Inflation concerns are also reflected in Diligent Institute’s Corporate Sentiment Tracker, which lists “inflation” as the top term being discussed by corporate leaders in the news over the last week. Additionally, scores for the terms “growth” and “future” have begun to trend negatively over the last 90 days, meaning that corporate leaders are discussing these topics in more negative terms.


The Year Ahead

Amid these increasingly cautious projections for the year ahead, the proportion of directors forecasting increases in revenue and profits remained steady, at 90 percent and 86 percent respectively—from 90 and 87 percent in May. By contrast, 82 of CEOs we polled this month predicted revenues would rise in the coming year, and 74 percent expected their profits to increase.

The proportion of directors forecasting increases in capital expenditures dropped to 57 percent from 60 percent the month prior.

A Sector View

Looking at director sentiment by sector, forecasts varied from 6.7/10 in consumer staples to 7.8/10 in healthcare. The largest month-over-month change was in the technology sector, where director confidence fell 11 percent from 8.1/10 in May to 7.2/10 in June on concerns surrounding the imbalance in supply and demand both for labor and materials.

The largest gain was in the industrials sector, where confidence improved by 8 percent, from 6.9/10 in May to 7.5/10 in June, fueled by increases in demand resulting from the lifting of Covid-related restrictions on business.

About the Director Confidence Index

The Director Confidence Index is a quarterly survey of public company board members on the state of the overall economy, the outlook for corporate finances 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. The May survey was fielded from 18 through the 21 of 2021.

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. Learn more at

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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