93% of businesses are turning to AI or automation, with the majority saying they will pass those costs on to customers.
According to the Conference Board’s latest U.S. CEO Confidence report, released Thursday, executives are cautiously optimistic about the economy, yet increasingly focused on cutting costs, often at the expense of headcount.
Why is CEO confidence up but hiring still down?
In the second quarter of 2025, fear of a looming recession dominated corporate boardrooms, with over 70% of CEOs preparing for an economic downturn. That mood has shifted sharply in Q3, with only a third now expecting a recession and just 3% predicting global spillover effects, as quoted in a report by Fortune.
Still, that improvement in sentiment isn’t translating into aggressive hiring plans. The report shows that 34% of CEOs expect to reduce their workforce in the next 12 months either through layoffs or by leaving vacant positions unfilled. That’s up from 28% in the previous quarter. Meanwhile, the share of executives planning to expand staff has slipped to 27%, and those expecting no change fell to 39% from 44%.
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“For the first time since 2020, more CEOs are planning cuts than expansions,” noted Roger W. Ferguson Jr., vice chairman of the Business Council and chair emeritus of the Conference Board, as quoted in a report by Fortune.
How are Trump’s tariffs shaping business decisions?
A big factor behind the cautious approach is the growing cost pressure from President Trump’s new tariff regime. With global supply chains already strained, these import duties are squeezing company budgets.
The Conference Board found that 93% of CEOs are actively looking to reduce costs by implementing AI or automation, a record high. And when it comes to absorbing tariff-related price increases, most executives aren’t willing to take the hit themselves: 64% said they will pass those costs directly to consumers, and another 16% are still deciding.
This marks a sharp increase in pass-through pricing compared to past surveys, underscoring how inflationary pressures could hit households in the coming months, as quoted in a report by Fortune.
Is AI replacing jobs in 2025?
Analysts from Macquarie noted that while initial unemployment claims remain low, continuing claims are edging higher, suggesting people who lose their jobs are finding it harder to get back into the workforce.
Data from the Bureau of Labor Statistics shows that new entrants and reentrants to the labor market are being hit hardest, making it tougher for those without solid career experience to secure work. In many cases, roles once filled by these job seekers may now be handled by automation or AI systems.
CEO confidence may be rebounding, but cost control is king in 2025. With tariffs raising expenses and technology offering cheaper alternatives to human labor, the coming year is likely to see a mix of targeted layoffs, automation adoption, and higher prices for consumers. For workers and shoppers alike, the economic landscape could feel a lot tighter.
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FAQs
Why are so many CEOs planning job cuts?
Rising costs from tariffs and a push for efficiency are leading firms to downsize or freeze hiring.
How will companies handle tariff-related cost increases?
Most will turn to AI or automation, and many will pass the price hikes on to customers.
