Business Conditions Survey

July 2025

NABE Panelists Report Steady Business Conditions, Although Concerns About Risk of Recession and Policy Uncertainties Remain

COMMENTS: “The July 2025 NABE Business Conditions Survey panelists assess a slightly lower probability of the U.S. entering a recession over the next 12 months than they did in the May 2025 survey,” said NABE President Emily Kolinski Morris, CBE, global chief economist, Ford Motor Company. “However, companies are taking a more cautious approach to hiring and capital expenditures amid elevated materials costs and wages.”

“While the recession probabilities have shifted slightly lower, an elevated and consistent share of panelists remains concerned about uncertainty over the implementation and timing of policy from the new administration,” added NABE Business Conditions Survey Chair Selma Hepp, chief economist and senior vice president, Cotality. “The majority believes that the effective tariff rate will be in the 15%-to-25% range. Their uncertainty may be holding businesses in a neutral state.”

HIGHLIGHTS

• Roughly one in four respondents anticipates that their firms will delay hiring or investment over the next 6 months. Just 2%-3% of the panel expect that their companies will accelerate hiring or investment in the U.S. over that same time period.
• Materials costs continue to rise, with 56% of panelists reporting higher materials costs, up from 52% in May. The NRI for observed costs rose six points from May to 54 in July, the highest reading since the July 2022 survey. The NRI for expected materials costs is 49, down from 54 in May 2025.
• The share of respondents citing “U.S. economic recession” as a top downside risk to their companies’ outlooks fell from 84% in the May survey to 59%. The same share lists “uncertainty over the implementation and timing of policy proposals from the new administration” as one of the top three downside risks.
• A majority of panelists (67%) expects that the average effective tariff rate will remain the same or increase slightly by the end of the year, compared to the Yale Budget Lab estimate of 15.8% at the time the July survey was conducted.