Confidence among chief executive officers of small and midsize businesses (SMBs) jumped to 100.8 in the fourth quarter of 2024 — a 15.7-point quarter-over-quarter increase and the highest score recorded since 2021’s second quarter.
That’s the news from the latest CEO Confidence Index released by CEO coaching and peer advisory organization Vistage. This sharp increase, Vistage officials said, reflects growing optimism for future revenue and profits, with CEOs’ plans for investments and hiring now exceeding both pre-pandemic levels and decade-long averages.
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Growing levels of confidence are driven in part by the more than half (55%) of CEOs who believe the economy will improve over the next year, which is a substantial increase over earlier in 2024 and in 2023. This optimism is largely fueled by the upcoming change in U.S. leadership, according to Vistage. Of those CEOs anticipating improvements, the majority cite the new administration as the reason for their positive outlook.
“We ended 2024 with a significant boost to CEO confidence, an indicator of the long-awaited growth cycle forecasted to begin in 2025,” Joe Galvin, Vistage’s chief research officer, said in a statement. “Economic conditions are largely shaped by factors such as administration policies, trade regulations, inflation, and consumer confidence. More than half of CEOs expect the economy to improve in the coming year, with many optimistic about the new administration and the potential for pro-business policies, reduced regulations, lower inflation, and reduced borrowing costs to drive investment and fuel growth.”
Here are three takeaways from the latest Index:
CEOs are preparing for the impact of policy shifts under the new presidential administration.
Nearly two-thirds (65%) anticipate tax policy changes will positively impact their business, 44% expect new labor and employment laws to make a positive impact, and 30% expect health care policy changes to impact their organizations positively. On the other hand, 29% believe immigration policy changes will negatively impact their organization.
CEOs are increasing hiring plans.
Again, nearly two-thirds (65%) of SMB CEOs expect their organizations’ total number of employees to increase in the year ahead. Three in 10 anticipate their total number of employees to remain the same, and only 5% of CEOs plan to decrease their employee headcount in 2025.
SMBs are embracing artificial intelligence.
When asked how they feel about open and generative AI such as ChatGPT, 77% of SMB CEOs noted they feel the technology presents a “tremendous” opportunity for their business. Only 11% reported they struggle to understand how AI works, while 2% considered it as a risk. About 4 in 10 (38%) are currently testing AI for select functions, 22% said their business is already using AI as part of their daily operations, and 45% planned to increase their technology budget in the next year to accommodate adding AI technologies and applications.
Vistage has measured SMB CEOs’ sentiment on various economic and business factors every quarter since 2003. Analysis using ITR Economics’ rate-of-change methodology has revealed the Vistage CEO Confidence Index is a leading indicator of the U.S. Industrial Production Index nine months in advance. The latest Index includes responses from 1,438 U.S. CEOs surveyed between December 2 and 16, 2024.
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