CEO Confidence Surges to Highest Level in a Year
Confidence among U.S. CEOs surged significantly in the first quarter of 2026, reaching its highest level since Q1 2025. The Conference Board's Measure of CEO Confidence rose to 59, up 11 points from the previous quarter. A reading above 50 reflects more positive than negative responses from business leaders.
- The surge in optimism comes after a period of cautiousness in the fourth quarter of 2025, where the CEO Confidence Index stood at 48, indicating more negative than positive responses. Concerns at that time included ongoing tariff uncertainty and geopolitical risks, though most CEOs still expected only a mild slowdown. - A year ago, in Q1 2025, CEO confidence was also in positive territory at a level of 60, a three-year high at the time. However, the broader economic picture was mixed, with real GDP contracting by 0.3% in that quarter, largely due to a surge in imports and a decrease in government spending. - Concerns over tariffs and inflation were significant for small and midsize business CEOs in Q1 2025, causing a historic drop in their specific confidence index. Many of these leaders were bracing for a continued margin squeeze due to tariffs, labor market tightness, and wage increases. - Looking ahead, CEOs' inflation expectations are softening. In the first quarter of 2026, executives anticipated inflation as measured by the Consumer Price Index to be 3.1% over the next 12 months, a decrease from their 3.3% expectation in the fourth quarter of 2025. - While overall confidence is up, hiring plans remain measured. The proportion of CEOs planning to expand their workforce in the next 12 months is 32%, a slight decrease from the previous quarter, suggesting a cautious approach to workforce expansion. - Technology, and specifically Artificial Intelligence, remains a top focus for business leaders. Discussions around AI initiatives were a primary topic in boardrooms in late 2025, and tech-focused CEOs are highlighting major investments in AI for 2026. - The current optimism among CEOs is underpinned by a belief in the resilience of the U.S. economy. In late 2025, despite some caution, many business leaders were starting to see opportunities for growth heading into the new year. - Expectations for interest rates in 2026 are for a gradual decline. As of late 2025, forecasts suggested the federal funds rate could be around 3% by the end of the year, with the Federal Reserve expected to proceed cautiously with rate cuts.
