Small and midsize business (SMB) CEO confidence surged to 100.8 in Q4 2024, a 15.7-point quarter-over-quarter increase and the highest score recorded since Q2 2021, per the latest CEO Confidence Index released by CEO coaching and peer advisory organization Vistage. This sharp increase 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.

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, a substantial increase from 32% in Q3 2024 and 21% in Q4 2023. This optimism is largely fueled by the upcoming change in U.S. leadership: Of those who expect 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," said Joe Galvin, Vistage's chief research officer. "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."

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.

Lauren Saidel-Baker, CFA and economist at ITR Economics noted, "The lift in the Vistage CEO Confidence Index is encouraging as it aligns with ITR Economics' forecasts for growth in 2025. With interest rate cuts totaling 100 basis points, borrowing costs are lower," Saidel-Baker said. "This is advantageous in two ways: Lower rates will stimulate the economy and make productivity investments more cost effective for small and midsize businesses. While interest rates are still higher than previous lows, there is a window of opportunity to invest, especially with anticipated higher demand in 2025."

Q4 2024 Vistage CEO Confidence Index highlights include:

CEOs are preparing for the impact of policy shifts under the new presidential administration.

• When asked how potential changes to the following policies would impact their business under the new administration:
  • Tax
    • 65% anticipate tax policy changes will positively impact their business.
  • Regulatory Compliance
    • More than half (52%) anticipate regulatory compliance changes will positively impact their organizations (vs. just 13% that expect negative impacts).
  • Labor and Employment Laws
    • 44% expect new labor and employment laws to positively impact their organizations (vs. 20% expecting negative impacts).
  • Environmental and Sustainability
    • 32% expect environmental and sustainability policies to positively impact their organization, with 17% citing a negative impact.
  • Healthcare
    • 30% expect healthcare policy changes to impact their organizations positively and 21% anticipate negative impacts.
  • Tariffs and Trade
    • Despite optimism, 60% anticipate tariffs and trade policy changes will negatively impact their business.
  • Immigration
    • 29% anticipate that immigration policy changes will negatively impact their organization.

CEOs are increasing hiring plans.

• 65% of SMB CEOs expect their organizations' total number of employees to increase in the year ahead.
  • 30% of CEOs anticipate their total number of employees to remain the same.
  • 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 note they feel the technology presents a "tremendous" opportunity for their business.
  • Just 11% report they struggle to understand how AI works, while 2% see it as a risk.

• 38% are currently testing AI for select functions, while 22% say their business is already using AI as part of their daily operations.
• 45% of CEOs plan to increase their technology budget in the next year to accommodate adding AI technologies and applications.

Small and midsize businesses experience fewer cyber incidents as a result of cyber risk planning.

• Only 5% of SMB CEOs say a cybersecurity incident resulted in lost or compromised data in 2024; 20% experienced an attack that didn't result in any lost or compromised data.
• 58% of CEOs noted that they have a current cyber risk strategy that is documented and communicated to executive leaders and is reviewed annually. 9% report they are actively working on a strategy. 16% report that their company does not have a defined cyber risk strategy.

See the full results of the Q4 2024 Vistage CEO Confidence Index at vistage.com/ceoindex.