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America’s CEOs are feeling better about current business conditions, butthey’reless convincedthings will get much betterfrom here.
Chief Executive’s latest CEO Confidence Index, fielded July 7-9 among 321 U.S. CEOs, shows leaders’ assessment of current conditions rising for a fourth consecutive month, up 2 percent from June to 5.8 out of 10—thehighest reading of the year.
Their year-ahead outlook, however, softened. CEOs now expect business conditions to reach 5.9 by this time next year,3 percentbelow the 6.1 they forecastedin June.That is stilla 3 percent improvement over current conditionsbutfarbelowthe 8 percent improvementthey’veforecasted, on average, each month this year.
The shiftdoes not signala broad turn toward pessimism, though.The shareof CEOsexpecting business conditions to improve over the next 12 months fell to 37 percent from 47 percent in June,whilethe share expecting conditions tostayabout the same rose to 38 percent.Only one-quarterexpectconditions to worsen, sentiment that hasremainedlargely unchangedthroughout 2026.
Askedwhat’sdriving their outlook,nearlyhalf(49 percent)say demand for their company’s products or services is highertodaythan it was a year ago, while another 31 percentsayit’sunchanged. Just 20 percent report weaker demand.
Even among CEOs who expect business conditions to worsen over the next year, 51 percent report higher demand today than a year ago—slightly higher than the share among optimists and neutral respondents, both at 48 percent.
Butstronger demand is being offset bycostpressures.CEOs citeprice volatility,healthcareand energy costs,rising wages and thedifficultyfinding andretainingtalent.
Greg Immell, CEOatSaporito Finishing Company, an anodizing and metal finishing manufacturerinIllinois, says demand and revenuesareincreasingat his company. “However,” he said, “healthcare, energy and wages have increased. The battle is to improve efficiencies to protect margins.”
AsanotherCEOput it: “Opportunities are significant, but the overall environment is very unstable right now.Challenging times.”
Robert Colescott, CEOofSouthern Specialties, sees AIas one way toease thepressure on operating margins: “Artificial intelligence, automation and other digital tools provide us with opportunities to reduce costs, eliminate inefficiencies, improve decision-making and streamline many of our business processes.”
The U.S. Economy
The six-month view of the U.S. economyremainsmore growth-oriented than recessionary. Sixty percent of CEOs expect either strong or mild growth over the next six months, while 26 percent expect the economy to remain flat. Fourteen percent expect a mild or severe recession.
Inflation expectations, however,remain elevated.For the fourth consecutive month,CEOs forecastanaverageinflationrate of3.6 percent over the next 12 months, keeping pricing and cost pressurestop of mind.
Corporate Forecasts
Stronger revenue expectationsare not translatinginto more aggressive hiring or investment.
Seventy-three percentof CEOs polledexpect revenue to be higher in 2026 than in 2025,and65 percent expect profits to increase. Butthe share forecastingreductions inheadcount rose to 22 percent from 17 percent in June, while the share planningto decreasecapital expenditures climbed to 21 percent from 17 percent.
“It is not possible to make clear investment and growth decisions in this environment,” saidoneCEO,“Until the world settles down,many in our supply chain will be buckling down.”
John S. Ondik, the founderof The Ondik Group, a management consulting firm in Pennsylvania,says the current environment is forcing some companies to slow investmentdecisions. “Macro challenges (domestic and global) are driving uncertainty, which impacts planning, hiring, investment—andmorale,” he said.
Neil Shah,presidentandCEOoftheConstruction Financial Management Association(CFMA),agrees:“The uncertainty in policy leading to fluctuations in workforce and inflation are the biggest risk to our business.”
The Conflict in the Middle East
Asimilarincrease in the proportion of CEOs planningreductions in capex and hiringsurfaced in the dataearlier in the year, when the U.S. first launched attacks on Iran.The conflictresumedduring theJulysurvey fielding period, andPresident Trump’s announcement on the end of the Iran cease-fireshowed up in the dataonce again.
Geopolitics registered more clearlyon CEOs’ radar,butresponses receivedafter the announcementdid not turn more negative.Rather, CEOs’ year-ahead forecast ticked up slightly, from 5.9 amongthose who responded prior to the announcementto 6.0 among those respondingafter it.
What changed was the language CEOs used to explain their outlook.War and geopolitical concerns appeared in 38 percentof responsesreceivedpost-announcement, up from 24 percentpre-announcement, even if it did notderail CEOs’ broader forecast.
Exposure may help explain the split. Among CEOsoperatingonly in the U.S., the year-ahead outlook improved from 5.9 to 6.2 afterthe announcement. Among those with international exposure, the outlook ticked down slightly, from 5.9 to 5.8.
But even among internationally exposed CEOs, the shiftisnot dramatic. Their outlookremainsclose to neutral/slightly positive, and the share expecting conditions to worsenticked up modestly, from 23 percent to 30 percent.
One CEOsays domestic companies should pay closer attention: “Watch global economics,” he said,“because they impact SMB andmidsized companies a lot more thenyouthink it does.”
