(NewsNation) — While CEOs are feeling less concerned about President Donald Trump’s tariffs, a growing number still expect to cut headcount over the next year.
About a third of CEOs (34%) plan to shrink their workforce over the next 12 months, up from 28% last quarter, according to the Conference Board’s latest CEO confidence survey released Thursday.
The uptick marks the fifth straight quarterly increase and the first time since 2020 that more CEOs expect to reduce the size of their workforce than expand it.
At the same time, recession fears among CEOs have significantly declined — from 83% expecting a downturn in the next 12 to 18 months in the second quarter to just 36% last quarter.
CEO confidence rebounded in the third quarter following a collapse driven by trade war uncertainty, but the report noted the recovery fell short of a “return to optimism.”
“The improvement is a continuation of the trend seen after tariff disputes between the US and China became less intense and potentially reflects ongoing progress on trade negotiations,” said Stephanie Guichard, senior economist, global indicators at the Conference Board.
The apparent disconnect between CEO confidence and workforce expectations underscores the dual threat facing American workers: a cooling labor market and the rise of AI.
Almost all of the CEOs surveyed (93%) said they intend to manage costs and boost productivity by leveraging technology, like AI or automation, over the next six months. Roughly two-thirds (64%) plan to manage costs by passing them on to customers.
July’s lackluster jobs report has also increased anxiety about the overall health of the labor market.
U.S. employers missed analysts’ expectations last month, but even more concerning were the major downward revisions that wiped out hundreds of thousands of previously reported gains — a sign the job market is weaker than economists thought.
The report was so grim that Trump fired Erika McEntarfer, the head of the Bureau of Labor Statistics, alleging, without evidence, that the jobs data was manipulated for political reasons.
That said, the unemployment rate ticked up only slightly to 4.2%, reflecting a stagnant “no hire, no fire” market.
Moody’s Analytics Chief Economist Mark Zandi is more pessimistic and warned that the economy is on the “precipice of a recession” in an X post Sunday.
“Unemployment remains low, but that’s only because labor force growth has gone sideways,” Zandi wrote. “The foreign-born workforce is shrinking, and labor force participation is declining.”
Zandi said “increasing U.S. tariffs and highly restrictive immigration policy” are why the economy is struggling.
On Thursday, Trump’s reciprocal tariffs on dozens of countries kicked in, and the president says more sector-specific levies on semiconductors and pharmaceuticals are coming.
Meanwhile, the S&P 500 is hovering near its record high, and stocks are on pace for their third weekly gain in the last four as of midday Friday.
A total of 122 CEOs participated in the Conference Board’s third quarter survey, which was fielded from July 14 to 28.
