A sharp reversal from Q1 optimism
Corporate America’s mood swung dramatically in the span of just three months. The Conference Board Measure of CEO Confidence, produced with The Business Council, fell to 47 in the second quarter of 2026 from 59 in the first quarter, as optimism among leaders of large firms plunged. Any reading below 50 indicates more negative responses than positive ones, and the survey drew responses from 141 CEOs fielded between May 4 and May 18. That 12-point drop reflects the steepest quarterly reversal the index has recorded in some time, occurring as the Iran war dragged into its third month.
Executives say the economy has genuinely worsened
This isn’t just vague unease — CEOs are reporting a concrete deterioration in conditions. Only 15% of CEOs said economic conditions were better than six months earlier, down sharply from 39% in the first quarter, while 47% said conditions were worse, up from just 8% the prior quarter. Looking ahead, only 24% of CEOs expected the economy to improve over the next six months, down from 43% in Q1, while 40% expected it to worsen, up from just 13% previously. Conference Board chief economist Dana Peterson described the reversal as confidence falling back into outright negative territory after the brief surge recorded earlier in the year.
Hiring plans are already shifting
The drop in sentiment is beginning to show up in concrete workforce decisions. Thirty-one percent of CEOs said they expected to reduce their workforce in the coming months, up from 27% in the first quarter, a higher share than the 28% who said they planned to expand headcount. Fox Business reported that corporations are signaling reduced hiring and the potential for layoffs as the broader economic outlook darkens. Because business leaders who lose confidence tend to pull back on both hiring and investment, that pullback risks weighing further on an economy already showing signs of strain.
Small and mid-size firms feel it differently
Confidence isn’t collapsing uniformly across company sizes. The Vistage CEO Confidence Index, which tracks small and midsize business leaders, dropped a more modest 1.7 points in the first quarter to 87.2, ending a three-quarter climb but still holding above its three-year average. Vistage’s chief research officer, Joe Galvin, noted that the decline reflects how CEOs had adapted to 2025’s turbulence, only to be confronted again by uncertainty tied to the unexpected Iran war. Tariff-related uncertainty was cited as a specific factor stalling business decisions and squeezing profit margins for smaller firms.
The global picture looks similarly shaky
The pessimism isn’t confined to the United States. PwC’s 29th Global CEO Survey found that only three in ten CEOs expressed confidence in revenue growth over the next twelve months, down from 38% in 2025 and 56% as recently as 2022 — the lowest level of confidence in five years. The survey, based on responses from 4,454 CEOs across 95 countries, pointed to rising exposure to tariff-related financial risk, with 22% of US CEOs reporting high exposure to potential losses from tariffs. Concern about cyber risk has also climbed sharply, cited by 31% of CEOs this year compared with 24% the year before.
The AI paradox
Perhaps the strangest feature of this moment is that corporate confidence is falling just as artificial intelligence adoption reaches new heights. CEOs are grappling with uneven returns from their AI investments even as adoption accelerates, alongside rising geopolitical risk and intensifying cyber threats. Despite widespread experimentation, only about one in eight CEOs say AI has delivered both cost and revenue benefits simultaneously, while more than half report no significant financial benefit at all so far. EY’s Parthenon survey of 1,200 CEOs found overall sentiment sliding from 83.0 to 78.5, even as executives continue doubling down on AI-driven productivity as a source of resilience.
Time horizons are shrinking
The pressure to manage short-term turbulence appears to be crowding out long-range strategic thinking. CEOs reported spending 47% of their time on issues with a horizon of less than one year, compared with just 16% on decisions that look more than five years ahead. That imbalance worries some analysts, who argue that companies fixated on quarterly survival are less likely to make the kind of patient, structural investments — in workforce training or long-term R&D — that tend to pay off only after several years.
Wall Street is already pricing in the mood shift
Markets watch these confidence surveys closely because they tend to precede revisions to corporate earnings forecasts. Fortune noted that among the accompanying market headlines was a warning from economist Ray Dalio that the US may have just experienced its own “Suez moment,” alongside a separate report of a major stock selloff driven by fears of looming memory chip shortages. Such juxtapositions illustrate how quickly a shift in executive sentiment can ripple into asset prices, even before hard economic data confirms a slowdown is actually underway.
What CEOs say worries them most
When asked to rank their top external risks, executives converge on a consistent set of concerns. CEOs reported greater worry about cyber risk for their industries in the second quarter compared with the first, with geopolitical tensions and risks tied to AI and new technology remaining top of mind as well. That combination of anxieties — cyber, geopolitics, and technological disruption — suggests that even if the current war-driven shock eventually fades, the underlying sources of corporate unease are structural rather than temporary.
A leading indicator worth watching
Because indices like these have historically tracked broader economic activity months in advance, the Vistage CEO Confidence Index has been shown, through ITR Economics’ rate-of-change methodology, to lead the US Industrial Production Index by roughly nine months. If that historical relationship holds, the sharp drop recorded in the second quarter of 2026 may be an early signal of softer industrial output later in the year — a reminder that decisions made in corporate boardrooms today often surface as pink slips, frozen budgets, or canceled expansion plans months down the road.
Sources:
- The Conference Board — “US CEO Confidence”
- The Conference Board / PR Newswire — “CEO Confidence Tumbled in Q2 2026”
- Fortune — “CEOs are losing confidence in the economy and expect conditions to worsen…”
- Axios — “CEOs are losing confidence, new survey finds”
- Fox Business — “CEOs signal layoffs, plummeting confidence as economic outlook darkens in 2026”
- Vistage — “CEO Confidence Trends Downward in Q1 2026”
- PwC — “2026 Global CEO Survey”
