Virginia Economic Outlook Index Continues Rebound

CEOs Express Preference for the Fed to Hold or Reduce Interest Rates, View AI as a Positive Capability
July 27, 2023

UNIVERSITY OF RICHMOND — The latest CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs showcases a rebound in the Virginia Economic Outlook Index. The survey also highlights CEOs views on fed rate hikes and found artificial intelligence was top of mind for area CEOs.

Continued Growth
The survey found expectations for revenue and employment over the next six months were positive, with employment growing faster than expectations a quarter ago.   Expectations about capital spending remained primarily flat.

More than half (54%) of CEOs expect revenue to increase over the next six months.

  • 2% expected revenue to be “significantly higher.”
  • 52% expected revenue to be “higher.”
  • 11% expected revenue to be “lower.”
  • 36% indicated they expected no change.
  • 18% expect at least a 10% revenue increase.

Thirty-two percent of CEOs expect capital spending to increase over the next six months (up slightly from last quarter), while 21% expect capital spending to decrease. More than 46% expect capital spending to remain flat.  

Fifty-five percent of respondent CEOs expect employment to increase over the next six months. Additionally, 41% expect employment to remain flat while only 4% expect employment to fall. 

Taken as a whole, the results about revenue, capital spending, and employment continue the positive trend of last quarter with the overall Economic Outlook Index increasing (85.1 versus 78.2) relative to the results from the end of Q1 2023.  

Interest Rate Changes
Virginia CEOs were asked about their preference concerning further interest rate changes by the Fed. The survey indicated that 49% of CEOs favor leaving rates as they are, with an additional 40% advocating for a reduction. Only 11% support a further rate hike.

AI Recognition and Acceptance
They were also asked their opinion on the potential impact of Generative Artificial Intelligence tools (such as ChatGPT) on their businesses. The survey highlights that 64% of CEOs consider AI as a positive capability that should be embraced. Only 6% perceive AI as a danger to be avoided.

Comments from Survey Administrators
“The survey results suggest that CEOs continue to see a positive future. They also strongly prefer that the Fed avoid further interest rate hikes,” said Rich Boulger, associate dean at the Robins School, who administers the survey. “The overall index continues to rise (85.1 versus 78.2 at the end of Q1 2023 and slightly up from 81.3 of a year ago).” 

Scot McRoberts, executive director of VACEOs, said “The CEOs I work with are finding opportunity in a very confusing economy. Many are telling me that workforce challenges are easing.”

For additional information about the CEO Economic Outlook Survey and a specific breakdown of the data, click here.

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