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American CEOs are feeling slightly more confident as they enter the second half of 2025 — but not optimistic enough to grow their headcount as they worry about headwinds from President Trump’s tariff plans.
The Conference Board released its U.S. CEO Confidence report for the third quarter Thursday, finding that CEOs have stepped back from the peak level of uncertainty they experienced in Q2.
For example, last quarter, 71% of CEOs were preparing for a recession with a further 12% expecting a deep economic shift with spillover to the rest of the planet. Q3, by comparison, is positively rosy in its outlook: Just 33% now believe there will be a recession, and only 3% believe there will be economic impact on the rest of the planet.
This geniality isn’t necessarily echoed by economists. This week Moody’s chief economist, Mark Zandi, said a bombshell labor report from the Bureau of Labor Statistics — among other data — had led him to realize America is “at the precipice of recession.”
While leaders on the ground may not agree, they are demonstrating why 2025 is likely to be the year of cost efficiency as bosses increasingly tighten their belts when it comes to payroll.
The Conference Board found 34% of CEOs expected a net reduction in their workforce over the next 12 months, up from 28% in Q2—either by cutting jobs or not filling the roles of those who leave.
Indeed, the share of CEOs planning to expand their workforce also ticked down to 27% from 28%, and 39% of CEOs said they planned to maintain the size of their workforce, down from 44% in Q2.
“The share of CEOs expecting some reduction in the size of their workforce over the next 12 months rose for the fifth consecutive quarter,” said Roger W. Ferguson Jr., vice chairman of the Business Council and chair emeritus of the Conference Board. “For the first time since 2020, CEOs planning to shrink their workforce exceeded the share looking to expand, though a plurality continued to anticipate little change (39%, down from 44%).”
Workers who leave, or are laid off, may face a tougher time returning to the job market. Some of the softness in the BLS’s recent report, wrote Macquarie’s North America economists in a note to clients this week, doesn’t come from layoffs but from people unable to reenter the market.
David Doyle and Chinara Azizova noted initial claims for joblessness remained low, suggesting layoffs are not spiking, but continuing claims edged higher, indicating those who had been laid off are finding it more difficult to land roles.
Indeed, the duo added, BLS Job Openings and Labor Turnover Survey (JOLTS) data revealed the number of unemployed appears to be rising most steeply among labor force entrants and reentrants, indicating those with a less concrete career history will find it difficult to get a foot on the ladder.
“Importantly, the economic consequences that flow from a job loss (and loss of income) are far more substantial than the untapped growth that comes from a new labor force entrant failing to find work,” they noted.
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Managing costs
Companies are facing increased cost headwinds because of the White House’s tariff regime, as global supply chains have become increasingly interwoven.
The vast majority of business leaders—93%—said they would be searching for cost efficiencies by deploying AI or automation to bring down overhead. And 64% said they would be passing that price hike on to consumers, while a further 16% said they are still considering the issue.
This is a higher portion of pass-through than indicated by previous surveys. For example, the New York Fed reported in June that 45% of services firms were intending to pass on the full extent of their tariff-related increases.
“CEO confidence recovered in the third quarter after collapsing in Q2, but fell short of signaling a return to optimism,” said Stephanie Guichard, senior economist for global indicators at the Conference Board. “The improvement is a continuation of the trend seen after tariff disputes between the U.S. and China became less intense, and potentially reflects ongoing progress on trade negotiations.
“CEOs’ views on current economic conditions made the sharpest recovery. Their six-month expectations for the economy as a whole and in their own industries also improved. CEOs’ assessments of current conditions in their own industries—a measure not included in calculating the top-line confidence measure—also recovered but remained in pessimistic territory. Fear of recession within the next 12 to 18 months eased dramatically, to 36% in Q3 from 83% in Q2.”
Written by Eleanor Pringle for Fortune as “A third of CEOs plan to axe jobs over the next year—and most now say they’ll pass on new tariff costs to their customers” and republished with permission.
