CEO confidence jumps to three-year high

CEO confidence improved significantly in the first quarter of 2025, shifting from caution to optimism and reaching its highest level in three years, the Conference Board said Thursday. The quarterly survey, conducted jointly with the Business Council, covered 134 CEOs and was conducted from January 27 to February 10.

"The improvement in CEO confidence in the first quarter of 2025 was significant and broad-based," said Stephanie Guichard, senior economist for global indicators at the Conference Board, in a statement. She noted that CEOs expressed noticeably more optimism about both current economic conditions and the outlook ahead.

Capital expenditure plans rise sharply

The survey showed that the proportion of CEOs planning toincrease capital expendituresover the next 12 months jumped 8 percentage points from the previous quarter to 33%. This figure reflects growing confidence in the economic outlook among the business community.

Policy uncertainty persists

Despite the rebound in confidence, CEOs andCFOsstill face challenges this year from a lack of clarity on federal regulatory, trade, immigration, and tax policies, all of which are being advanced under the Trump administration.

"Simply put, uncertainty has risen across the board," Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said in a report released Thursday. He noted that the Fed'strade policy uncertainty indexclimbed sharply late last year.

Bostic warned: "Banks with higher exposure to industries facing intense trade uncertainty may reduce lending, which would negatively impact businesses that rely on bank loans." Additionally, corporate executives are concerned that the Trump administration's mass deportation plans could constrain labor supply, especially in the housing construction and leisure and hospitality industries.

"The situation is very fluid, sometimes changing by the hour," Bostic said of the federal policy outlook. "Therefore, it is impossible to know exactly how any new approach will affect decisions and economic outcomes."

Small business optimism also rises

The Conference Board's findings align with a report from the National Federation of Independent Business (NFIB). In its January survey, the NFIB found that small business owner sentiment reflected what Bostic called "pervasive ambiguity."

"Small business owners welcomed the new year with a surge in optimism," the NFIB said this month in describing its January survey results. Seventeen percent of small business owners believe now isa good time to expand significantly, compared with just 4% a few months earlier.

However, the NFIB noted that "job creation plans remain below levels seen during the last period of robust economic growth," with the proportion of small businesses reporting they were hiring or trying to hire last month falling 3 percentage points to 52%.

Leading indicators retreat, risk perceptions diverge

Additionally, the index measuringthe U.S. economic outlookdeclined last month, "reversing most of the gains from the previous two months," Justyna Zabinska-La Monica, senior manager of business cycle indicators at the Conference Board, said in a statement Thursday. She noted: "Consumers' assessments of future business conditions turned more pessimistic in January, along with reduced weekly hours in manufacturing, jointly drove the monthly decline in the Leading Economic Index."

Despite these contradictory signals, CEOs this quarter believe many business risks are receding. Roger Ferguson, vice chairman of the Business Council, said Thursday: "Compared with the fourth quarter of 2024, fewer CEOs cited cyber threats, regulatory uncertainty, financial and economic risks, and supply chain disruptions as high-impact risks." He added: "The only exception is geopolitical instability, with 55% of CEOs in the first quarter viewing it as a high-impact risk to their industry, up from 52% in the previous quarter."