Two years after the collapse of Lehman Brothers, 51 percent of executives who responded to our most recent survey say the world economy is in recovery; 58 percent say so about their own countries.¹ Most expect corporate profits to rise this year from their level in 2009, and 38 percent expect to hire by the end of the year—the greatest share expecting to hire in the near term since before the crisis.

Even if companies are coping with the new economy, the results also indicate that executives’ confidence is tenuous. For example, more expect economic conditions to improve than not, but fewer say so now than did earlier this year. Notably, the share of respondents expecting better conditions in six months is lower than it was a year ago: 55 percent now, compared with 61 percent in September 2009. Furthermore, optimism on the current state of the economy compared with six months earlier started to fall in June and has taken a sharp dive in the past month. Compared with August, 10 percentage points fewer say the economy is better now. The slide is particularly notable in North America, where the share of respondents who say conditions are better has fallen 16 percentage points.

Among the lasting changes that executives say the downturn has produced in their organization are greater attention to changes in markets, improved risk management, and much stronger consciousness of costs. More than half of respondents have changed the criteria they use to make capital-investment decisions, most by applying more rigorous due diligence. Notably, though, most respondents don’t expect permanent changes in their companies’ workforce size or geographic location.