Confidence among chief executives of major U.S. companies has flipped from optimism to caution. A sharp drop in the second quarter marks the end of a brief surge that began the year.
The Conference Board Measure of CEO Confidence fell to 47 in Q2 2026 from 59 in Q1. Readings below 50 indicate more negative views than positive ones. The survey of 141 CEOs, conducted from May 4 through 18 in partnership with The Business Council, captured a stark shift. (PR Newswire, May 28, 2026)
“CEO confidence fell back into negative territory in Q2 2026, reversing the surge in optimism in the first quarter,” said Dana M Peterson, Chief Economist at The Conference Board. “CEOs reported that the economy is materially worse now than it was six months ago and expected economic conditions to weaken further over the next six months.”
Numbers paint a clear picture. Only 15% of CEOs described current economic conditions as better than six months earlier. That figure stood at 39% in the prior quarter. Meanwhile 47% called conditions worse. Up dramatically from 8%. Assessments of their own industries followed a similar but milder path. Thirty-three percent reported worse conditions. The same share said better. (Fortune, June 1, 2026)
Looking ahead, expectations turned pessimistic. Twenty-four percent of leaders anticipate improvement in the economy over the next six months. Down from 43%. Forty percent now expect worsening. A jump from 13%. Industry-specific forecasts remained somewhat more positive yet still cooled. Thirty-eight percent foresee better conditions in their sectors. Twenty-two percent predict decline.
The Iran Conflict Casts a Long Shadow
The ongoing war in Iran looms large. Though a ceasefire was declared in April, the conflict continues to disrupt energy flows through the Strait of Hormuz. Gas prices have climbed 50% since hostilities began. Supply chains face mounting pressure.
Shipping giant Maersk offers a concrete example. Its CEO Vincent Clerc noted the war adds $500 million in monthly costs. The company hesitates to pass those expenses to customers. Yet warnings suggest that may change. Such real-world impacts help explain why geopolitical risks rank high on CEOs’ lists. Nearly two-thirds cite cyber threats as a top concern. Geopolitical tensions and AI-related risks follow closely. Supply chain and energy worries gained intensity this quarter. (Axios, May 28, 2026)
But capital spending plans held steady. Most CEOs reported no revisions to their 12-month outlays. The share expecting increases in capital expenditures actually edged higher to 37% from 35%. Only 8% plan reductions. Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Chair Emeritus of The Conference Board, highlighted this resilience. “Planned business investment stayed the course in Q2, as most CEOs cited no revisions to capital investment plans. However, the share anticipating increases to capital spending plans in the next 12 months rose further, while fewer CEOs expect to reduce capex compared to Q1.”
Employment signals appear more mixed. Thirty-one percent of executives expect to cut their workforce over the coming year. That number rose from 27%. The share planning expansion slipped to 28% from 31%. Forty percent anticipate no change. The “low-hire, low-fire” dynamic persists. Hiring qualified talent grew somewhat easier overall. Yet more leaders report difficulties in specific areas. Planned wage increases clustered around 3% to 4%.
AI occupies an intriguing spot in executive thinking. A majority, 56%, believe the technology will have only a moderate impact on their industries. It won’t fundamentally transform operations. Still, preparation continues. Nearly one in four CEOs expect to upskill more than 50% of their workforce within two years. Most anticipate some reskilling needs. (The Conference Board)
This reversal arrives after a notable Q1 rebound. Confidence had climbed 11 points to 59 then, fueled by hopes of steadier conditions. The Q2 plunge erases that progress. It aligns with other signals of caution. Earlier PwC data from January already showed revenue confidence at a five-year low amid geopolitical risks and uneven AI returns. (PwC, January 19, 2026)
Executives aren’t freezing in place. Capital budgets remain largely intact. Some even plan modest increases. Yet the combination of persistent energy shocks, cyber vulnerabilities, and labor adaptation costs creates a heavier burden than many anticipated at the start of the year.
Peterson’s assessment cuts to the core. CEOs see current conditions as materially worse. They forecast further weakening. Their own industries face headwinds too, though perhaps less severe. The survey offers no single villain. Instead it reveals a convergence. Energy disruption from conflict. Renewed supply chain friction. Elevated cyber and geopolitical threats. All against a backdrop of AI promises that have yet to deliver uniform gains.
Markets will watch closely. So will policymakers. A sustained drop in executive confidence often precedes slower investment or hiring. Here the capex data offers some reassurance. Plans haven’t been scrapped. But sentiment has clearly soured. The coming quarters will test whether this pessimism proves self-fulfilling or simply reflects temporary pressures from an unresolved international conflict.
One thing stands out. CEOs aren’t panicking. They adjust. They prepare their workforces. They maintain spending where it counts. Yet the numbers show doubt. Forty percent now expect the economy to deteriorate. That’s triple the share from the prior survey. Such a swing rarely goes unnoticed on Wall Street or in Washington.
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