CEOs Lose Confidence In Economy As Head Winds Drag On: Report

Chief executives at some of the world’s largest companies are growing more pessimistic about the economy as the war with Iran rages on and consumer confidence continues to fall.

CEO confidence fell sharply in the second quarter, dropping 12 points to 47, according to a survey from The Conference Board and The Business Council. Any reading below 50 signals that negative views outnumber positive ones.

The survey, conducted from May 4 to May 18, included 141 Fortune Global 500 chief executives and came during the third month of the Iran war, which has added pressure to energy markets, inflation expectations, and global supply chains.

The decline marks a notable reversal from the wave of CEO optimism that followed President Donald Trump’s return to office last year, when many business leaders expected lighter regulation and a major tax cut.

That enthusiasm was later shaken by the administration’s “Liberation Day” tariff moves. Although optimism had begun to recover after the White House retreated from some of its most aggressive trade policies, the prolonged conflict with Iran appears to have halted that momentum.

According to Axios, 47% of CEOs said economic conditions were worse than six months ago, up from 8% at the start of the year. Only 15% said conditions had improved, down from 39% in the first quarter. When chief executives lose confidence, they often delay hiring or become more cautious with capital spending. Those decisions can slow growth even before a downturn appears in official economic data.

So far, however, the pullback has not fully materialized. Axios reported that CEOs have not yet changed their capital investment plans, and an increasing share said they still expect to raise that spending over the next year.

That suggests many companies are nervous, but not yet retreating. Wall Street has also remained largely resilient. U.S. stock indexes reached record highs on Wednesday, with the S&P 500, Dow Jones Industrial Average, and Nasdaq all advancing.

The market’s strength has been fueled in part by corporate earnings, especially in technology and artificial intelligence-related sectors. Goldman Sachs also raised its year-end target for the S&P 500 to 8,000 from 7,600, citing stronger earnings expectations. “Earnings growth has powered the entire S&P 500 return so far this year, and we expect this dynamic to continue in the coming months,” Goldman Sachs said in a note reported by Reuters.

Consumers are also growing more cautious. The Conference Board’s consumer confidence index slipped to 93.1 in May, while a University of Michigan gauge fell to a record low. Inflation, high gas prices, and weaker purchasing power have pushed many households to cut back.

“The prospect of higher prices and faster inflation continues to loom over confidence readings with many households taking a more cautious approach to purchases this year,” Ben Ayers, Nationwide senior economist, said.