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CMOs on Economic Recovery: A Look at the Long Climb Out

CMO Survey Results

While going through my students’ resumes before class, I read one that listed “stair climbing” as a competitive sport. I had never heard of this, so I looked it up and found a well-established world-wide network of races. You can, for example, climb the Empire State Building and Gran Hotel Bali. Doing well requires strength, sprint, and endurance. If you are really good and perform well in the 100+ races around the world, you could win the Towerrunning World Cup.

All this talk of climbing made me think it would be interesting to plot the economic recovery using data from The CMO Survey. I plotted several key financial metrics as reported by The CMO Survey between August 2009 and February 2012 in Figure 1. What a beautiful sight! Steady and significant improvement over the course of 2.5 years to where we are today. These numbers are in response to the question, “Rate your firm’s performance during the last 12 months.”

These trends mirror the general trajectory of stock market performance over this time period. There was more volatility but the climb was positive over time. Looking at the Dow Jones Industrial Average, we see it climb from 7496 (August 2009), 10,335 (February 2010), 10,015 (August 2010), 12,226 (February 2011), 11,613 (August 2011), to 12952 (February 2012).

Figure 1. Firm Performance in Prior 12 Months (August 2009-February 2012)

Looking at performance in February 2012, it is interesting to see that the four sectors I follow varied considerably. Table 1 indicates that the highest performing sector on all three indicators is B2B-Services, followed by B2B-Products. This is also an encouraging sign given the importance of B2B markets to the overall state of the economy.

Table 1. Sector Performance Metrics for Prior 12 Months (February 2012)

Finally, it is important to consider firms’ goals about future performance on each of these indicators. As shown in Table 2, goals are even higher than this already rosy picture. The goal of increasing profits from 3.9% to 6.2% over the next 12 months is about the best news we can expect.

Table 2. Company Performance and Goals (February 2012)