Uncertainty returns CEO confidence to pre-election levels [Q1 2025 CEO Index]

Uncertainty rules, much like it did through the recovery phase of a post-pandemic economy. The hopes and beliefs following the election for a pro-business tax and regulatory environment, along with stabilized inflation and interest rates and increased business activity, have been replaced by mounting concerns about economic instability. With this uncertainty comes a reversal in post-election optimism, as the Vistage CEO Confidence Index fell 22.1 points to 78.5 in Q1 2025.

The dramatic quarter-over-quarter drop is historic on the surface, but in reality, it’s just a 6.6-point drop from the Q3 2024 reading of 85.1 and is still above levels recorded in 2022 and 2023.

The economic pessimism voiced by 13% of CEOs who expected the economy to worsen in December has grown to 42% in March. Conducted between March 3 and 17, 2025, this survey also revealed a drop in optimism: In Q4, 55% of CEOs expected the economy to improve over the next 12 months, a proportion that has fallen to 28%.

Uncertainty top challenge, driven by tariffs

Negative impacts of changing tariff policies were reported by nearly 7 in 10 CEOs. This sentiment was recorded before the April 2 global tariff announcement; the potential implications of these tariffs further complicate planning, disrupt supply chains and exacerbate the uncertainty. This only adds to an already defensive posture by CEOs to protect their business and will likely curtail investments, hiring and expansion even further.

The impact of tariffs and potential trade wars with multiple countries will raise costs, as manufacturers and importers subject to tariffs will subsequently pass these increased costs on to consumers. That will, in turn, drive up inflation, resulting in the Federal Reserve raising interest rates to offset inflation’s impact. This is further compounded by the threat of supply chain disruption and the consumers’ response to higher prices, not to mention the reciprocal tariffs imposed on our imports into other countries. A growing perception of government unpredictability and the impact of mass federal layoffs combined with radical budget cuts is crushing CEO confidence.

The issue is tariffs, but the problem is uncertainty. The “Mr. Miyagi” tactic of “tariffs on, tariffs off” makes planning nearly impossible. Tariffs and trade policies are the biggest and most pressing concerns raised by CEOs. While changing tariffs and trade policies were unclear in December, they did not contribute to pessimism in our Q4 2024 data. Now, the reality of the policies being suggested and implemented is seen as inflationary and disruptive to business planning. The transition to the new administration is no longer fostering optimism about the economy or the trajectory of business. Instead, it has given way to a more polarized belief in economic instability and chaotic decision-making, as opposed to a business-friendly environment.

Pricing strategy critical

In response to rising costs anticipated from tariffs, persistent inflation and still-increasing labor costs, CEOs must once again revisit their pricing strategy. This is critical as 44% report raising prices since the beginning of the year, and 51% plan to increase prices over the next three months.

Boost Profits President Casey Brown delves into the recent tariffs announcement and shares strategies for handling the impending turbulence.

First signs of workforce decline

Certainly, slowing demand and delayed projects caused by uncertainty and rising costs have downstream effects on the workforce. While 31% of CEO report their hiring increased in the first 3 months of the year, those companies are likely among those experiencing increased demand and backlogs.

Looking ahead over the next 12 months, 45% of CEOs still plan to add workforce. More notable is that 14% plan to decrease their number of employees. Since the survey began in 2003, the only other times this figure rose as high was during the pandemic in 2020 and the 2009 recession, an indication that today’s uncertainty is a major event for small and midsize businesses.

For those in a position to take on top talent, this is a great time to secure the people you will need to scale as growth is forecasted to pick up moderately at the end of the year into 2026. For those struggling, there are opportunities to gain efficiencies in AI to do more with less.

Planning for the future

It’s a documented fact that hope is not a strategy. The Vistage CEO Confidence Index data suggests a challenging landscape emerging for CEOs in 2025. Uncertainty, instability, and unpredictability create a volatile economic landscape for CEOs to navigate. With forecasts of moderate growth toward the end of the year, CEOs must maintain their flexibility, build cushions and closely monitor their markets.

For some, their business will continue to thrive, seeing record backlogs and surging revenues as they anticipate a record year. For others, it will be a mixed bag of results, as fears of the yet-to-be-implemented tariffs and resulting trade wars potentially wreaking havoc on their business. The impact of the rapid policy changes has yet to be felt and will most likely change again.

To explore the full Vistage CEO Confidence Index survey dataset, view the infographic and visit our data center.

The Q1 2025 Vistage CEO Confidence Index survey was conducted between March 3 and 17, 2025, and captured input from 1,796 leaders who are active Vistage members of Chief Executive and Small Business groups in the United States.

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