US business optimism tumbles from election elation

by Nina Trentmann

US business optimism has moved sharply lower, deepening a trend seen in the first quarter and marking a sharp reversal from the buoyant mood among executives after Donald Trump’s reelection as president. 

Less than a third, or 27%, of executives polled in May by the Association of International Certified Professional Accountants said they were confident about the economic outlook for the 12 months ahead, down from 47% of respondents in the first quarter and 67% in a survey conducted in the fourth quarter, just after the US vote. 

“We’re seeing a lot of revised expectations: delayed hiring and investment, pared-back expansion plans, lowered key performance indicators,” said Tom Hood, executive vice president at the AICPA. “The data shows a clear pivot from optimism to caution. Businesses are bracing for volatility, and the uncertainty around tariffs is amplifying that shift.”

The AICPA found that one in five business executives believe the US is already in a recession, while another 34% say they expect one by the end of the year. Of those expecting a recession this year or next, 75% predict it will be moderate to severe.

The findings indicate a significant deterioration in confidence in the space of a few months, during which Trump upended global trade relations, put pressure on Apple Inc. and other US businesses, and pressed Congress for a tax bill that in its current form includes a provision set to impose significant cost increases on international investors and companies. 

While Trump moved to pause many of his most aggressive tariffs for a 90-day period, tensions with China rose again this week after the president on Friday accused Beijing of violating agreements with Washington.

As sentiment among executives has soured, mentions of keywords such as “uncertainty” have surged on companies’ first-quarter earnings calls. Many businesses have pulled their guidance or are refraining from giving any, and job cuts have accelerated in parts of the economy. Hiring at US companies declined to the slowest pace in two years in May, with private payrolls increasing by 37,000, according to ADP Research Institute data released Wednesday. 

The AICPA survey added to evidence of a softening economy, with just 14% of respondents stating they are looking to hire employees immediately, down from 20% in the first quarter. Expected revenue growth for the coming 12 months – at 1% – is at its most anemic since the third quarter of 2020, when many businesses were hamstrung by the pandemic, the AICPA said. 

Survey respondents now expect to generate a 0.3% loss in the coming year, down from a 1.7% profit in the first-quarter survey. The percentage of respondents who expect their business to expand dropped to 43%, down from 57% in the first quarter. 

Domestic economic conditions were the top concern cited during the second quarter, displacing inflation, which was the leading worry in the first quarter. Also high on the list of concerns were costs of supplies and equipment, domestic political leadership and stagnant and declining markets, according to the organization. 

The AICPA conducted its latest survey from May 5 to May 27, polling 328 members working for US companies, including chief executives, chief financial officers and controllers.

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