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Economic Outlook Dips for Consumers, But CEOs Are Confident
Vicki M. Young
5 min read
American CEOs are more confident, but consumer pessimism over future business conditions drove the decline in The Conference Board’s Leading Economic Index (LEI).
“The U.S. LEI declined in January, reversing most of the gains from the previous two months,” said Justyna Zabinska-La Monica, The Conference Board’s senior manager for Business Cycle Indicators. “Consumers’ assessments of future business conditions turned more pessimistic in January, which—alongside fewer weekly hours worked in manufacturing—drove the monthly decline.”
That’s in-line with results from the Conference Board’s Consumer Confidence Index in January, which fell 5.4 points to 104.1. Jobs and inflation topped consumer concerns.
The good news now is that manufacturing orders have almost stabilized after weighing heavily on the Index since 2022, she said, adding that the yield spread contributed positively for the first time since November 2022. Moreover, Zabinska-La Monica noted that just four of the LEI’s 10 components were negative in January. LEI components include average weekly hours in manufacturing, average weekly initial claims for unemployment insurance, manufacturers’ new orders for consumer goods and materials, and average consumer expectations for business conditions, among others.
Another positive note was that the LEI’s six-month and annual growth rates continued to trend upward, suggesting milder obstacles to U.S. economic activity ahead. “We currently forecast that real GDP for the U.S. will expand by 2.3 percent in 2025, with stronger growth in the first half of the year,” she said.
The Conference Board said its Coincident Economic Index (CEI) for the U.S. rose 0.3 percent in January 2025 to 114.3, following a rise of 0.3 percent in December 2024. The CEI tracks four indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—to get an overview of current economic conditions. The four indicators are included among the data used to determine recessions in the U.S. All four improved in January, with the “largest positive contribution coming from industrial production for the second consecutive month,” the Conference Board said.
In addition, the Conference Board’s Lagging Economic Index (LAG) rose by 0.5 percent to 119.3 in January 2025. The Conference Board said LAG’s six-month change turned positive to 0.3 percent growth for the first time since the summer of 2024.
In contrast to consumer pessimism is the increasingly buoyant attitude of CEOs, which sent the Conference Board’s Measure of CEO Confidence (Measure) up 9 points in the first quarter of 2025 to 60. That level is the highest in three years and reversed the slip in confidence for the last two quarters. The survey of 134 CEOs, in collaboration with The Business Council, was conducted from Jan. 27 to Feb. 10. The Conference Board said that the Measure’s current level indicated that “CEOs have shifted from the cautious optimism that prevailed in 2024 to a more confident optimism.” A reading above 50 reflects more positive than negative responses.
Forty-four percent of CEOs said economic conditions were better than six months ago, up from just 20 percent in the fourth quarter of 2024. And 56 percent of CEOs expected economic conditions to improve over the short term, or next six months, up from 33 percent in the prior three months.
“All components of the Measure improved, as CEOs were substantially more optimistic about current economic conditions as well as about future economic conditions—both overall and in their own industries,” said the Conference Board’s Stephanie Guichard, senior economist, global indicators. “CEOs’ assessments of current conditions in their own industries also improved.” Guichard also noted an increase in the share of CEOs expecting to increase investment plans and a corresponding decline in the number expecting to downsize investment plans. A majority of CEOs also indicated no revisions to their capital spending plans over the next 12 months.
Moreover, 73 percent of CEOs planned to grow or maintain the size of their workforce over the next 12 months, although the share expecting to expand their staff fell to 32 percent from 40 percent in the prior fourth quarter. Twenty-seven percent said they planned to reduce their workforce. And the share of CEOs who said they plan to raise wages by 3 percent or more over the year climbed to 71 percent, up from 63 percent in the fourth quarter. The majority of CEOs, at 60 percent, plan wage increases in the 3.0 percent to 3.9 percent range. In addition, labor shortages appear to ease, with more CEOs reporting little or no problems hiring staff. And while most companies have hybrid—3 or 4 days a week in the office as the most popular option—work arrangements, more CEOs plan on shifting toward a 100 percent in-office workforce over the next 12 to 18 months.
“Accompanying Q1’s surge in confidence, CEOs also reported an easing of concerns regarding a range of business risks,” said Roger W. Ferguson, Jr., vice chairman of The Business Council and chair emeritus of the Conference Board. “Compared to Q4 2024, fewer CEOs ranked cyber threats, regulatory uncertainty, financial and economic risks, and supply chain disruptions as high-impact risks.”
Ferguson said the one exception was geopolitical instability, whereby 55 percent of CEOs in the first quarter—up from 52 percent last quarer—said it was a high-impact risk to their industry.
A separate Conference Board survey after the U.S. election last November found that trade and geopolitics were among the top concerns of CEOs in 2025.
