American chief executivescame down with a severe bout of pessimism to welcomethe newyear,ararereversalina survey that has tracked corporate sentiment for more than two decades.
Chief Executive’slatestCEO Confidence Indexreading, fielded January 13-14among 250+ U.S. CEOs,shows both confidence and optimism on the declinethisJanuary—breaking a pattern that has held for the Index’snearly entire24-year history.
CEOs’ assessment ofcurrent business conditionsin the U.S.fellto 5.5 out of 10 in January, on a scale where 1 is Poor and 10 is Excellent, from 6/10 in December—an8 percentdecline. Itmarksthe first time CEOs havebeguna new year withsuch a sharp drop in sentiment from the previous month.
And while CEOsforecast conditionswill improveby year-end, the degree of the expected rally contracted by 6 percent in Januarycompared with December projections. Those pollednow forecast business conditionswill reach6.0out of 10 byDecember,down from theirpreviousestimate of 6.4.
The January declinerepresentsonly the fifth time in the Index’s history that the new-year outlook fell below the prior December—and the sharpest contractionby far.
Interest rates and cost of capitalareconstrainingbusiness planning, alongside broader costpressuresand limited visibility into the coming months.Butthevagaries of President Donald Trump’s White Houseare the reasonmostCEOs surveyed cited astheprincipal concernweighing ontheir2026outlook.As one CEO put it:“uncertainty is the new certainty.”
Still,a growingshareofCEOsexpressed hope for improvement, particularlyin the second half of the year.“I believe that we will experience lower interestratesthe second half of the year along with all of thebusiness-friendlyrules and regulations from the One Big Beautiful Bill implemented,” said one CEO.
Otherspointed to businesses adapting to the volatility as a potential catalyst for renewed investment.“Brands and retailersaresettlingintothe new normal of tariffs,with possible breaks or reductions,” commentedoneCEO.
Added another: “With interest rates steady and new potential tax breaks from current admin, the chatter for investment is starting to improve.”
Some arebankingonpolitical dynamics to ease volatility. “A likely divided government after the midterm elections will reduce shocks to the economy and allow companies to invest with more confidence,”explainedone CEO.
It’sthe Economy…
Recession fearshavedeclinedsince last year.Just15percent of CEOs expect a downturn in thefirst half of the year, while57percentanticipateeconomic growth, as improvements in economic data and technology investments provide some counterweight to prevailing uncertainty.
Yetnearly halfofCEOspolledidentifiedthe U.S. economy asthe top riskto theirbusiness. “The U.S. economy seems fragile and may turn down with little warning,” said one CEO.
Another described the broader economic mood in starker terms:“The national economy seems to be hanging on by a thread, maybe waiting for a bubble to burst, or maybe waiting for a dam to break, and nobody seems to have a clear prediction of which will happen.”
Anotherexpressed concern about the sustainability of current growth drivers: “The U.S.economy is my biggest concern.It’sbeginning to feel like consumer spending is propped up by high-earners and business spending is propped up by AI infrastructure and data centers.”
Focusing on Margins and Controllable Factors
Against this backdrop,CEOs areconcentratingonoperational levers within their control, with54 percent citing“achieving target profitability” as their top priorityfor 2026.
The path to those margins, however,faces obstacles. Managingrising costs andfindingways topassprice increases through to customersemergedas the foremost challenges to growth.“Resisting downward pressure on pricing against upward pressure on costs,”one CEO said,citingutilities, laborratesandcommoditiesas theprincipal concerns.
“Labor and benefits costs continue to rise but[there is]no opportunity to increase prices since raw material costs are flat,”addedanother CEO.
Still, corporate forecastsremainlargely unchangedfromDecember:76percent expect revenue increases (vs.75 percent inDecember), and67percentanticipateimproved profitability (flat from prior month).
Investment plans suggest some underlying optimism persists. Forty-five percent of surveyed CEOs plan to increase capital expenditures in 2026, up from 42 percent in December—a 6 percent increase. Meanwhile, 53 percent plan to expand headcount this year, compared with 46 percent a month earlier,representinga 15 percent jump.
