Small and midsize business CEOs’ confidence in the economy decreased significantly in Q1 2025, according to the latest CEO Confidence Index from CEO coaching and peer advisory organization Vistage.
The Index plummeted a historic 22 points from the previous quarter, from 100.8 to 78.5. This sharp decline is primarily driven by growing concerns over tariffs and heightened inflation.
“CEO confidence took a significant hit in Q1 2025, a stark juxtaposition to the gains we saw in Q4,” said Joe Galvin, Vistage’s chief research officer. “While such a drop would typically raise alarm bells, it brings levels back near those seen in Q3 2023. The high confidence in the previous quarter was likely driven by optimism about what the new administration might accomplish, while the current reading reflects the reality of ongoing economic challenges. This uncertainty, along with tariffs and growing concerns among consumers, is leading to a more cautious outlook for the U.S. economy.”
Since 2003, Vistage has measured SMB CEO sentiment regarding a variety of economic and business factors every quarter. ITR Economics’ rate-of-change methodology has confirmed the Vistage CEO Confidence Index is a leading indicator of the U.S. Industrial Production Index nine months in advance.
Lauren Saidel-Baker, CFA and economist at ITR Economics, commented: “Price increases are going to be critical as there will be a continued margin squeeze caused by tariffs, the labor market and wage increases. Margin is the critical differentiator of winners and losers going forward.”
Q1 2025 Vistage CEO Confidence Index highlights include:
CEOs are increasingly uncertain about economic conditions.
- When asked how overall economic conditions have changed over the past year, 41% of SMB CEOs report that conditions have worsened, and 42% expect the economy to continue to worsen in the year ahead.
Tariffs are a major source of concern for CEOs.
- 69% of CEOs said trade and tariff policy changes will negatively impact their businesses.
Finding and retaining qualified employees remains a widespread challenge.
- Despite the current economic environment, 45% of CEOs plan to add personnel in the year ahead.
- However, 14% of CEOs intend to reduce hiring. Since the survey began in 2003, the only other times this figure rose as high was during the pandemic in 2020 and the recession in 2008 and 2009.
CEOs are navigating the impact of changes in government spending.
- When asked about the potential effects of changes in government spending:
- 10% of CEOs expect direct impacts, such as cuts in government orders, contracts, or grants
- 32% anticipate indirect impacts, such as cuts to customers’ or vendors’ government-related contracts
- 20% foresee both direct and indirect impacts
Companies are raising prices amid economic uncertainty.
- 44% have increased their prices since the beginning of the year, and 51% plan to implement price increases in the next three months. Of those increasing prices, 13% are planning hikes of more than 10%.
CEOs and leadership teams are actively utilizing AI in their operations.
- 70% of CEOs and 61% of leadership teams are actively using AI in their operations. In comparison, 55% of individual employees are utilizing AI.
- 47% of CEOs are leveraging training to ensure their employees effectively use GenAI.
View the full results of the Q1 2025 Vistage CEO Confidence Index at: vistage.com/ceoindex
About the Vistage CEO Confidence Index
Established in 2003, the Vistage CEO Confidence Index surveys small and midsize business CEOs, presidents, and business owners about the U.S. economy every quarter. The Q1 2025 Vistage CEO Confidence Index includes responses from 1,796 U.S. CEOs surveyed between March 3 and 17, 2025. Using ITR Economics’ rate-of-change methodology, analysis has revealed that the Vistage CEO Confidence Index is a leading indicator of the U.S. Industrial Production Index 9 months in advance.
The Vistage CEO Confidence Index is recognized as the definitive voice of high-performing, high-integrity small and midsize business leaders. As a trusted resource, the Index provides world-class insights to inform decision-making for CEOs and other key leaders of small and midsize businesses.
For more Vistage CEO Confidence Index results, visit vistage.com/ceoindex
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
Tags: confidence, economy, Small Business, tariffs
