After a 30 percent decline in March, directors’ rating of business conditions in the U.S. retreated another 5 percent in May, according the 128 U.S. public company board members polled May 12-14 as part of Corporate Board Member’s Director Confidence Index with Diligent Institute.
The Index, which measures directors’ confidence in the current business environment, is now down to 4.4, on a scale where 1 is Poor and 10 is Excellent, from 4.7 in March and 6.7 at the start of the year.
Directors’ expectations for what those conditions will be 12 months from now, however, improved slightly in our May polling, clawing back 4 percent of the previous quarter’s 33 percent drop. While a small proportion, we captured a similar uptick in optimism among CEOs in our latest CEO Confidence Index.
This month’s forecast highlights a potential 9 percent improvement in the business landscape 12 months out, according to our director survey—an improvement the board members polled attribute to a likely positive resolution to the current trade negotiations.
“Government efficiency and fair trade will ultimately improve economic outlook at a macro level,” said Phil Garfinkle, chair of the WidePoint board, noting however that some industries may nevertheless “stumble as they navigate the new horizon.”
Some directors added that the strength of the U.S. economy should also counterbalance the uncertainty surrounding tariffs. “A lot of noise currently with unknowns, but fundamentals are sound,” said one director, echoing others.
As a result, 40 percent expect business conditions will continue to improve over the coming months. That proportion is up from 36 percent last quarter. Perhaps even more telling is that the proportion of directors who forecast things will deteriorate further in the coming months declined by nearly half in May, to 21 percent from 41 percent in March.
“We need to get through the short-term tariff overhang; underlying business activity will strengthen as uncertainty lessens,” said one director.
“The policy transitions underway will be clearer [by this time next year]—and many will contribute to stronger forecast,” added another director who forecasts growth and improvement over the coming months.
Still, 57 percent continue to expect a recession within the next six months—a situation several called “unavoidable”.
THE YEAR AHEAD
Overall, 48 percent say despite the uncertainty in the current environment, they remain focused on growth this year, though 36 percent said they are also keeping a close eye on risk mitigation through reforecasting and scenario planning.
More specifically, 39 percent said they are working on diversifying their supply chain and/or revising their pricing model, the two items they say have been the most impacted by recent changes to trade policies.
When asked how all of this is expected to impact companies’ bottom lines, directors shared their forecasts:
- 65 percent forecast increases in revenue in 2025, down from 69 percent in March
- 59 percent forecast profit growth this year, down from 69 percent
- 41 percent plan to increase capital expenditures in the months ahead, up from 32 percent in March
Participants in the survey receive a more in-depth look into the sector variances. If you wish to obtain details on a particular data point, please send your request to research@chiefexecutivegroup.com.
About Corporate Board Member
Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq.
About the Diligent Institute
Diligent Institute informs, educates, and connects leaders to champion modern governance. We provide original, cutting-edge research on the most pressing issues in corporate governance; certifications and educational programs that equip leaders with the knowledge and credentials needed to guide their organizations through existential challenges; networks that convene directors and corporate executives to share best practices and insights; and awards and recognition programs that celebrate the accomplishments of those who champion modern governance. Learn more at diligentinstitute.com.
