Record Concern about Tariffs Expected to Increase Costs and Prices, Reduce Hiring and Investment
Financial decision-makers’ outlooks deteriorated in the second quarter of 2025, amid record concern about the impact of trade policy. Forty percent of respondents indicated tariffs and trade policy were a pressing concern for their firm this quarter, a record share of respondents citing the same concern going back to the second quarter of 2020.
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CFO Optimism
When asked between May 19 and June 6 to rate optimism about the overall U.S. economy on a scale from 0 to 100, the average rating from CFOs was 60.9, down slightly from the first quarter of the year.
CFOs’ Most Pressing Concerns
Trade policy and tariffs remained the top concern for CFOs for the second consecutive quarter. Concerns about uncertainty increased, while concerns about inflation saw a large decrease in share of total mentions.
CFOs’ Expectations for Their Firms’ Performance
The second quarter results suggest that CFOs expect heightened price and unit cost growth in 2025 and 2026. They also expect lower revenue growth than they did last quarter.
| CFOs' Growth Expectations for Their Own Firms, by Response Quarter | Q2 2025 | Q1 2025 | ||
|---|---|---|---|---|
| Mean (and Median) Expected Year-Over-Year Percentage Change for Calendar Years | 2025 | 2026 | 2025 | 2026 |
| Revenue | 5.4% (5.0%) | 7.1% (5.0%) | 6.8% (5.0%) | 7.2% (5.0%) |
| Price | 4.8% (3.5%) | 4.3% (3.0%) | 3.5% (3.0%) | 3.4% (3.0%) |
| Unit Cost | 5.2% (4.0%) | 4.4% (3.0%) | 3.9% (3.5%) | 3.5% (3.0%) |
| Employment (full-time) | 2.5% (0.8%) | 2.6% (1.4%) | 2.5% (1.1%) | 3.0% (1.7%) |
| Average Wage | 4.0% (3.0%) | 3.9% (3.0%) | 4.2% (4.0%) | 4.1% (3.5%) |
| Note: Q2 2025 data in the table reflect results for 451 to 496 U.S. firms responding to the Q2 2025 survey (May 19 – June 6, 2025). Results from the Q1 2025 survey (February 18 – March 7, 2025) are shown for comparison (for 349 to 390 firms). Revenue, Price, and Unit Cost are weighted by sales revenue. Employment and Average Wage are weighted by employment. These data are also winsorized at 5% to remove the potential influence of extreme values. | ||||
The share of firms that increased spending (excluding capital expenditures) in the past three months declined to 36.3 percent from 40 percent in the previous quarter.
CFOs’ Expectations for the Aggregate Economy
CFOs revised downward their expectations for real GDP growth over the next four quarters to 1.4 percent from 1.9 percent in the prior survey. Moreover, the probability respondents assign to negative year-ahead economic growth rose to 22.7 percent from 14.5 percent last quarter.
| CFOs' Expectations for Real GDP Growth Over Next Four Quarters, by Response Quarter | Q2 2025 | Q1 2025 |
|---|---|---|
| Weighted Mean | 1.4% | 1.9% |
| Weighted Median | 1.3% | 2.0% |
| Probability of Negative Growth | 22.7% | 14.5% |
| Note: Q2 2025 data in the table reflect results for 465 U.S. firms responding to the Q2 2025 survey (May 19 – June 6, 2025) and that indicate they are familiar with Gross Domestic Product (GDP). Results from the Q1 2025 survey (February 18 – March 7, 2025) are shown for comparison (for 374 firms). Responses are weighted by sales revenue. | ||
| Expectations for Stock Market Performance, by Response Quarter | Q2 2025 | Q1 2025 | ||
|---|---|---|---|---|
| Expected Annual S&P 500 Returns Over Next 12 Months and Next 10 Years | 12 Mos (N=352) | 10 Yrs (N=358) | 12 Mos (N=280) | 10 Yrs (N=280) |
| Worst Case (a 1-in-10 chance the actual return will be less than): | -4.2% | 3.8% | -3.5% | 3.6% |
| Most Likely Case | 5.0% | 9.6% | 6.1% | 9.7% |
| Best Case (a 1-in-10 chance the actual return will be greater than): | 10.7% | 14.8% | 12.4% | 14.5% |
Note: The table shows responses from firms that indicated they closely follow the stock market. Results from the Q1 2025 survey (February 18 – March 7, 2025) are shown for comparison. Responses are unweighted and winsorized at 5% to remove the potential influence of extreme values. Please see The CFO Survey Methodology for further information. Source: Duke University, FRB Richmond and FRB Atlanta, The CFO Survey – Q2 2025 (May 19 – June 6, 2025) | ||||
Special Questions on Tariffs and Trade Policy
The second quarter survey asked firms how uncertainty around tariffs and trade policy have affected their expectations for the year and their planned capital expenditures. Firms were also asked if they have taken or plan to take any actions in response to additional tariffs or uncertainty. The 40 percent of firms that cited tariffs as a pressing concern were more likely than their unconcerned peers to report reducing capital expenditures, passing through cost increases, and moving up purchases. Manufacturers were more likely than non-manufacturers to take action in response to tariffs.
For additional discussion of these results, visit our Research & Commentary section.
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