Heading South on Main Street

Corporate credit managers try to keep close tabs on businesses they have trade relationships with to avoid any nasty surprises (e.g., defaults). Consequently, they are often among the first to know when economic conditions are deteriorating significantly.

Today, CFO.com reported that the National Association of Credit Management’s

monthly Credit Managers Index, which fell for the fifth consecutive month in December, now stands at its lowest level since April 2003.

But CCMs are not the only corporate executives who are worried about where things are headed. Late last November, a Duke University/CFO Magazine Business Outlook quarterly survey found that Chief Financial Officers remain pessimistic about the economy. The reportnoted that

although the level of optimism about the U.S. economy recovered from a five-year low reached last quarter,…the optimism diffusion index…[was] still in negative territory.

CEOs have also been less than sanguine about future growth prospects. In October, the Conference Board announced that its Chief Executives’ Confidence Measure fell to 44 in the third quarter,

the first time it [had] dipped below 50 in nearly five years, when it was at 40 in the final quarter of 2001.

Finally, data on (legal) insider trading of company shares by corporate executives suggests they are increasingly betting against their own companies’ prospects. In a Barron’s column by Alan Abelson citing commentary by CrossCurrents publisher Alan Newman and data from Thomson Financial, officers, directors and other so-called insiders

dumped an astounding $16 billion worth of their stock, or nearly 35 times as much as they bought. By comparison, in the 11 months beginning December ’05 and ending October ’06, the ratio of sellers to buyers among insiders averaged 10.7-to-1.

It looks like those who work on Main Street have a far different perspective than those who ply their trade on Wall Street.