The news media often get blamed for fanning the flames of recession or boom simply by writing about it. There is a certain truth to this. People read that foreclosures are soaring or Internet stocks are going to the moon, and it affects how they think and helps turn the trend into a self-fulfilling prophecy. It's the Heisenberg Uncertainty Effect of current events: the mere fact of observing and recording a phenomenon changes the phenomenon. But that's how human communication and behavior works. Sometimes people overreact to the news; that's certainly no a reason not to report it. Stifling the facts to avert a potential negative popular reaction is a recipe for tyranny.

But out today, from the Conference Board, is an economic reading from those much less likely to be influenced by headlines and much more likely to know what's really going on: CEOs. CEO confidence has fallen to its lowest level since the end of 2000 -- right before the last recession. These folks are seeing corporate sales, profits and shipments as they're happening. The Conference Board results probably provide an early look at fourth-quarter corporate profits. Most profit results haven't been released yet. But in today's report, the CEOs who already know those results are telling us how disappointing they're likely to be. This is a matter of hard facts driving perceptions, not vice versa.

Jan. 15, 2008…The Conference Board Measure of CEO Confidence, which had declined to 44 in the third quarter of 2007, fell to 39 in the final quarter of 2007 (a reading of more than 50 points reflects more positive than negative responses). The last time the Measure fell below 40 was in the final quarter of 2000 when it fell to 31.

“CEOs’ confidence in the state of the U.S. economy continues to wither and is now at a seven-year low,” says Lynn Franco, Director of The Conference Board Consumer Research Center. “Given continued trouble in the housing and credit markets, persistent volatility in financial markets and increases in energy prices, it’s not surprising that confidence has eroded. Looking ahead, the majority of business leaders expect these lackluster economic conditions to prevail throughout the first half of 2008.

CEOs’ assessment of current economic conditions was considerably less positive, with just 7 percent of CEOs – down from 14 percent last quarter – stating economic conditions had improved. In assessing their own industries, business leaders were also less optimistic. Approximately 15 percent claim conditions are better, down from approximately 17 percent in the third quarter.

Looking ahead six months, the outlook has turned more negative. Currently, 16 percent of business leaders expect economic conditions to improve in the next six months, down from 20 percent last quarter. Expectations for their own industries are also less upbeat, with only 17 percent anticipating an improvement, down from 27 percent last quarter.