Steep Decline in CEO Confidence Signals Economic Challenges
Significant Drop in CEO Confidence in Recent Survey
The Conference Board recently reported a dramatic decline in the Measure of CEO Confidence, reflecting a stark shift in the sentiment among business leaders. In Q2 2025, the metric plunged by 26 points to a mere 34, marking the lowest level since late 2022. This decline is notable as it represents the most significant quarter-over-quarter decrease since the survey's inception in 1976.
CEOs participating in the survey expressed deep concerns regarding the current economic climate, indicating a pervasive sense of pessimism. According to Stephanie Guichard, a Senior Economist at The Conference Board, the components of the confidence measure all turned negative. Many CEOs reported feeling that economic conditions had deteriorated, with a substantial segment predicting continuing decline over the coming months.
CEOs' Insights on Economic Conditions
In the latest survey, CEO assessments about present economic conditions showcased a sharp downturn. A staggering 82% of CEOs indicated that the economy was in worse shape compared to six months prior. This represents a substantial increase from just 11% in the previous quarter. The feedback about their own industries was equally alarming, as 69% reported worsening conditions, a steep rise from 22% in Q1.
Looking ahead, more than half of the CEOs expressed concern about worsening conditions over the next six months. The shift in expectations indicates a growing fear among executives regarding potential recessions and economic setbacks.
Identifying Key Risks for Businesses
When asked about the main risks threatening their industries, CEOs highlighted geopolitical instability as a primary concern, with trade and tariffs following closely behind. Interestingly, regulatory uncertainty also loomed large, suggesting that policymakers play a critical role in shaping business perceptions.
Cybersecurity threats, which dominated discussions in previous quarters, have dropped down the rankings as organizations start to find better resilience in their digital infrastructures. While many CEOs foresaw no significant changes to their capital spending plans, the quarter revealed a stark increase in those anticipating reductions to their investment strategies.
Workforce and Employment Perspectives
In the context of employment, many CEOs expect little change in their workforce sizes over the coming year. The share of CEOs planning to expand their teams slightly decreased from 32% to 28%. The ongoing labor shortages, coupled with economic uncertainties, seem to be influencing these decisions.
Additionally, wage growth appears to be moderating as well. The number of CEOs planning to raise wages fell sharply from 71% to 58%, and there’s an observable shift towards smaller wage increases among certain groups, particularly those who responded after a crucial date mid-May.
Current Conditions and Future Outlook
As the conditions surrounding the economy and various sectors continue to evolve, the uncertainties affecting business confidence are palpable. CEOs are bracing for potential downturns, with risk assessments reflecting the gravity of their situation.
Wages, Capital Spending, and Hiring Trends
A detailed look at their plans reveals a nuanced strategy regarding employment and finances. More leaders are maintaining workforce sizes, while others indicated the likelihood of reductions. Hiring appears to be stabilizing, yet many still encounter challenges in finding qualified workers.
In terms of wage increases, a significant share of CEOs are opting for modest raises. Expectations regarding capital investment are also shifting, with fewer leaders planning expansions compared to earlier projections. This caution hints at broader concerns about the economic landscape and internal business conditions.
About The Entities Represented
The Conference Board serves as a vital think tank, providing insights and analysis crucial for navigating economic challenges. Established in 1916, it operates without partisanship, focusing on delivering useful intelligence to its members. Their research underpins understanding among executives seeking to address the evolving risks within the marketplace.
The Business Council, representing top CEOs from major multinational corporations, highlights collaborative dialogue as a pathway to understanding key challenges. By convening leaders across diverse sectors, the Council encourages meaningful discussions aimed at fortifying strategic directions amidst uncertainty.
Frequently Asked Questions
What caused the drop in CEO Confidence in Q2 2025?
The significant decline was driven by worsening assessments of current economic conditions and the near-term outlook for growth and employment.
How do CEOs view the economic future?
Many CEOs anticipate deteriorating economic conditions and express concerns about potential recessions affecting their industries.
What are the top risks CEOs identified for their industries?
Geopolitical instability, trade and tariffs, and regulatory uncertainties are among the top risks cited by CEOs in the recent survey.
What trends are emerging regarding wages and employment?
Wage growth is moderating, with more CEOs planning smaller increases. Additionally, many expect little to no change in workforce sizes, reflecting ongoing uncertainties.
How does The Conference Board contribute to business insights?
The Conference Board provides valuable research and analysis, helping organizations understand complex economic challenges and navigate their strategic responses.
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