Director Confidence Index: May 2025
Director outlook improves slightly in May amid continued headwinds
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 this month's Director Confidence Index, conducted in partnership between Diligent Institute and Corporate Board Member.
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 the 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.
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