CEO Confidence Remains ‘In Neutral’ As Leaders Wait [Vistage Q3 CEO Index]

“Only time will tell” is a time-honored truth. No strategy instantly comes to life at its announcement; it takes time for the initiatives to take hold and begin to have an impact. Leaders have a vision and extol the greatness of things to come, promising a brighter tomorrow, given time. However, it requires patience to see that vision come into reality, especially in uncertain times.

CEO Confidence Rises, Remains Below Last Year

The Q3 2025 Vistage CEO Confidence Index remains ‘in neutral’ as CEOs await a pivot to prosperity or a retreat into recession. The Index rose by 4.7 points to reach 81.9, but despite the gain, this level of confidence has not yet broken the low of 2024. While slightly above the 12-quarter average of 80.2, confidence remains well below the 97.8 average of the 2010s.

Each of the six components that comprise the Vistage CEO Index experienced a slight increase from the previous quarter. Backward-looking views of the economy improved, but forward-looking expectations barely rose. Anticipated revenue and profits ticked up as well, slightly above the 3-year average. Investments and hiring followed suit with minor increases.

While there is good news in the fact that the proportion of CEOs planning to increase headcount in the year ahead grew 6 points from last quarter to reach 48%, 13% plan for reduced headcount in the next 12 months. This represents three consecutive quarters where the proportion of CEOs expecting headcount to decrease has been in double digits, exceeded only by Q2 2020, which marked the depth of pandemic uncertainty and the Great Recession. 

“Recent CEO sentiment points to a more subdued expansion ahead,” said Lauren Saidel-Baker, CFA and economist at ITR Economics. While the survey closed before the Federal Reserve meeting, Saidel Baker notes that while “the Federal Reserve enacted a 25-basis-point rate cut in September, conflicting statements from Fed officials have added to overall uncertainty.”

Subtle Shifts in CEOs’ Top Challenges

While the challenges that CEOs face have mainly remained the same, the perspective and priorities they place on these shifts are influenced by new data, changing perspectives, and the passage of time.

Economic and policy uncertainty continues to be the top challenge for CEOs, unchanged from last quarter; however, their attention has shifted. In Q2, CEOs voiced concerns about tariffs, unpredictable federal policies, geopolitical tensions, and interest rates. Three months later, their focus has shifted to a broader set of worries about the economy, policy swings, and customer caution. There is a greater focus on general economic instability rather than specific tariffs. The top challenges referenced included slowing sales, customer hesitation, and reduced demand, suggesting a softening marketplace.

Hiring and retention has replaced tariffs and trade as the #2 issue for CEOs, marking another shift. Last quarter, labor issues were #3, but upward pressure on labor concerns and challenges has pushed hiring and retention to where it now stands, nearly at the top.

Businesses struggle to recruit both skilled labor, such as technicians and engineers, and leadership talent, while wage inflation and high turnover exacerbate the issue. Immigration contributes to this challenge for small and midsize businesses in certain sectors.

Tariffs & Trade Policy slipped to #3. The on-again/off-again tariffs uncertainty, supply chain impacts, and resulting pricing swings continue to weigh on CEOs. The ongoing discussion of trade wars, global uncertainty, and geopolitical instability, accompanied by frequent shifts in U.S. trade policy, has led to disrupted supply chains, increased input costs, and delayed capital projects.

Rising costs and inflation remain a persistent issue as materials, wages, and interest rates all shift in bad directions. While the proportion of CEOs expecting increased revenues in the year ahead ticked up, the top 5 challenges, including softening/delayed customer demand, are also on the rise. While more may expect increased revenues, the rate of revenue growth may be slower due to customer hesitation.

Tangible Tariff Impacts

Tariffs have quickly gone from headlines in Q1 to bottom lines in Q3. The initial whipsaw of changes to tariffs has now somewhat stabilized, allowing the 35% of CEOs who say they are directly impacted by tariffs to adapt. Another 36% say they are indirectly impacted, with just 5% experiencing a positive impact.

Tariffs are beginning to take their bite out of SMBs. The most significant impact is on costs: 62% report that tariffs have increased their costs, and correspondingly, 46% have experienced decreased profitability as a result. Among the negative impacts are declines in customer demand, reported by 37% of CEOs, and declines in revenue, reported by 33%. While tariffs generate a revenue windfall for the government, they come at the cost of reduced margins and profitability for businesses.

CEOs are not standing still. Tariffs are impacting them on several fronts and reshaping their operations. Indeed, 43% of CEOs have already increased prices, and 51% plan to raise prices in the next 3 months. Of those raising prices, half plan increases of 4% to 10%, while 15% will increase prices by more than 10%. Other actions as a result of tariffs include:

• 23% have decreased capital expenditures.
• 16% report a reduction in hiring.
• 15% have decreased marketing.

The costs of critical materials, including steel, aluminum, copper, wood, and electronics, have increased by anywhere from 10% to 50%. Some suppliers are using tariffs as an excuse to further increase prices. Part of those increases is passed to customers through surcharges or higher bids.

The bigger headache is uncertainty. Tariff rules and rates are constantly changing, making budgeting, quoting, and long-term planning challenging. Projects get delayed, capital spending is frozen, and clients hesitate to commit when nobody knows what their costs will look like next quarter. Customers postpone purchases or cancel plans, especially in construction, manufacturing, and export-oriented markets, as they absorb the impact of tariffs.

Some leaders have made supply-chain shifts, sourcing more materials domestically or relocating production to lower-tariff countries like Mexico and Australia, even though these options often come at a higher cost. Domestic producers can gain an edge by taking advantage of others’ rising costs, improving margins, and price competitiveness. The tariffs are not temporary. They will continue to make planning a day-to-day function instead of confidently investing in growth. In this environment, strategic planning becomes even more critical.

Immigration Impacts Select Industries

Another policy that can have a profound impact on small and midsize businesses is immigration. While 70% of CEOs report no direct operational impact from recent immigration policy changes, a small but significant minority of CEOs (15%) have experienced indirect but tangible effects.

For those managing the impacts, a recurring theme is heightened fear and anxiety among employees, even those fully documented or naturalized. CEOs report that staff members are worried about their families, avoid public gatherings, or feel targeted because of their appearance or language, which in turn lowers morale and productivity.

Industries dependent on immigrant labor — particularly construction, agriculture, manufacturing, and hospitality — face the most significant pressure. These employers note fewer applicants, rising wages, and the loss of skilled and unskilled workers due to visa delays or the revocation of Temporary Protected Status. High-skill sectors, including technology, also report difficulty attracting global talent as visa processing slows and international candidates perceive the United States as less welcoming.

These challenges ripple outward, increasing subcontractor costs, delaying projects, and straining customer service. While most companies remain unaffected for now, those confronting labor shortages and employee unease highlight the broader economic stakes of immigration policy.

Just 10% of CEOs report trouble with Visa and Trusted Person Status (TPS) complications, which are causing delays, loss of existing talent and creating difficulty attracting global talent. The newly announced changes to the H1B visas will affect those already in the United States, but replacing them or adding foreign expertise to current workforces will be expensive.

Stabilizing the Workforce

One factor that impacts all small and midsize businesses is the workforce model they have adopted since the pandemic. The transition from the pre-COVID Monday-Friday/9 to 5 (MF95) office to the workplace of today is now complete. The workplace of small to midsize businesses has become mostly stable over time, with a modest increase in those who are entirely in the office compared to Q2 2022.

With today’s economic uncertainty, rising inflation, and taxing tariffs, among other factors, CEOs have little appetite for changing the makeup of their workforce by disrupting their workplace. Any change would break the now-established workplace status quo, impacting the employee’s workplace experience. At the end of last year, 75% of CEOs anticipated no change in their workplace model. While 20% planned to make changes, the majority were adjusting their in-office requirement from 3 to 4 days.

The dynamics of the workplace have a direct impact on how workers feel about their job and their level of engagement. Flexibility has emerged as the new requirement for the workplace. In the MF95 world, the physical workplace and the tools, machines, devices, and technology used defined their experience, as attendance was required. Now, flexibility has become the third leg of the workplace, with hybrid and fully remote roles accepted.

The physical workplace, combined with the worker’s boss and the culture, creates a Venn diagram of the employee experience. CEOs have control of each of those attributes. The experience they create for their workforce impacts both retention and recruitment, as workers have had options. Engagement of workers will be critical to retention.

To drive engagement, CEOs shared different best practices. Just over half use retention rates, a lagging indicator. While most measure engagement through managers, over 6 in 10 leverage engagement surveys. As Katina Holliday, founder and CEO of Carson, California-based Helping Hands, Inc., shares, their employee engagement priorities include “different types of recognition, increasing bonuses for employee of the month, and incorporating a leadership training program.”

CEOs are waiting for the time when new policies regarding trade, tariffs, taxes, and immigration will fully take effect. Forecasts of future growth offset predictions of impending doom, and yet only time will tell. That’s why CEOs remain in a waiting mode to see if they need to become more conservative in their expectations of unfavorable outcomes or become more aggressive as opportunities unfold. One certainty is that the clock will always keep ticking, constantly pushing the economy to a pivot point where words, promises, and predictions are replaced by reality.

To explore the full Vistage CEO Confidence survey dataset, view the infographic and visit our data center. 

The Q3 2025 Vistage CEO Confidence Index survey was conducted between September 2 and 16, 2025, and captured input from 1,349 leaders who are active Vistage members of Chief Executive and Small Business groups in the United States.

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