Design leaders confidence in the economy weakens substantially

NEW YORK, November 11, 2008.  AIGA’s Design Leaders Confidence Index for the third quarter of 2008—based on responses of 285 design leaders from various types of practices—dropped to the lowest level since the survey was launched in 2005, hitting a measure of 50. Although this confidence reading is down from the previous quarter’s 68, the positive views balance negative outlooks on economic conditions.

Only thirty-four percent of respondents believe the design economy is as strong or better than six months ago. Yet their perspective on the next six months is more positive than business leaders’—though still very sobering: 38.5 percent feel the design economy will be moderately worse, and 13 percent feel it will be substantially worse. Twenty-three percent believe the design economy will be stronger in six months.

Design leaders are not positive about hiring prospects or equipment purchases. Only one in eight is likely to increase either staff or equipment during the next six months.

The corporate CEO confidence survey conducted by The Conference Board among 100 leading corporate CEOs posted a reading of 40 in the third quarter, virtually unchanged from 39 in the second quarter. (A reading of more than 50 points reflects more positive than negative responses.) Only 7 percent claim current conditions are better than the previous quarter’s. About 20 percent of business leaders expect economic conditions to improve in the next six months and only 17 percent believed their own industries would be stronger in six months. Both of these measures are more pessimistic than the previous period.

The Conference Board's Consumer Confidence Survey dropped to 38.0 in October, compared with 61.4 in September. This is the third largest monthly drop in the history of the index. The index of consumers’ confidence in how the economy will perform in the next six months follows this pattern.

Some analysts believe this will result in a 3.5 percent drop in consumer spending over the next quarter, which is slightly greater than the recently reported drop in the quarter just completed. Since consumer spending rarely drops in aggregate (even after September 11, 2001), this is a major disruption to economic growth.

The next Design Leaders Confidence Survey will be conducted in mid-January 2009.