Va. CEOs provide grim economic outlook due to COVID-19

Fewer than 7% of Virginia CEOs expect sales, capital spending or employment to increase during the next six months, according to the first quarter 2020 CEO Economic Outlook Survey released Monday by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs. It’s the lowest percentage response to that question in the survey’s 10-year history.

“I’ve heard from several small and mid-sized business CEOs that it is like someone turned off the faucet,” Scot McRoberts, executive director of the Virginia Council of CEOs
(VACEOs) , said in a statement. “Suddenly last week, no one is calling, no one is buying. Some of these businesses will go under.”

The survey specifically asked questions related to COVID-19, such as whether the crisis has caused them to change products, markets or customers. CEOs were also asked what “extraordinary steps” their businesses are taking, and nearly all mentioned remote work and sanitation guidelines — but some mentioned pay cuts and furloughs.

CEOs were also asked what state and federal governments can do to help small businesses during the crisis, and many responded that they would need business tax relief and low- or no-interest loans to keep their employees. But 14% believe that significant layoffs are “probably” or “definitely” likely, according to the survey results.

More than 87% of CEO respondents expect sales to be lower, and a majority also expect the decline to be more than 10 percentage points. Some are lowering prices to encourage sales, according to the survey results.

“We have never seen such a complete reversal in CEO sentiment,” Robins School Associate Dean Randy Raggio said in a statement. “Just last quarter, CEOs seemed optimistic for a continued strong economy. Now, everything has collapsed and none has any certainty about the future.”

The Robins School and VACEOs jointly conduct the survey on a quarterly basis. Raggio administers the survey and collects the responses each quarter.

“Many will find a way through this crisis by relying on reserves, scaling back, and innovating within the current environment,” McRoberts said in a statement.“We are working hard to help our CEOs stay connected so that they can help one another.”

More than 100 CEOs responded to the survey, which is the largest number of respondents since the survey began in 2010. CEOs in construction, manufacturing, finance, insurance, retail and other industries were surveyed.