Business Conditions Survey

May 2025

NABE Survey Reports One in Four Firms Considering Price Hikes or Delays in Hiring and Investment in Response to Ongoing Policy Shifts

COMMENTS: “The May 2025 NABE Business Conditions Survey results reveal that our panelists assess a higher probability of the U.S. entering a recession over the next 12 months, up materially since the January 2025 survey,” said NABE President Emily Kolinski Morris, CBE, global chief economist, Ford Motor Company. “Three out of four panelists put the probability of a recession at more than 25%. Of course, recent high-frequency surveys, including those conducted by NABE, show that these assessments are highly sensitive to the timing of the survey. This survey was in the field the week of April 21-30, 2025, prior to the announcement of a reduced U.S. tariff rate on imports from China on May 12.”

“While expectations of the future average tariff rate have declined, tariffs are still expected to impact some hiring, investment, and price decisions going forward,” added NABE Business Conditions Survey Chair Selma Hepp, chief economist and senior vice president, Cotality. “The survey results suggest that many firms were in wait-and-see mode during the first quarter of 2025, and made no changes to hiring, prices, or capital spending. However, with sales continuing to slow, profit margins shrinking, and higher materials costs expected ahead, the focus for many companies has shifted to rising prices, increased risks of recession, and uncertainty over the implementation and timing of policy from the new administration.”

HIGHLIGHTS

• The probability of a U.S. recession has shifted notably higher since the January survey. Seventy-five percent of panelists put the probability of a recession at more than 25%. In the January survey, 15% of panelists put the probability at more than 25%.
• A plurality of panelists does not expect their firms to change hiring, investment, or prices due to announced tariffs. Forty-three percent do not anticipate changes, while 29% expect to delay hiring, 25% expect to delay investment, and 25% expect to raise prices.
• While a large majority of respondents—67%—reports no change in prices during Q1 2025, no respondents report falling prices. Looking ahead, more respondents expect rising prices than falling prices in the next three months.
• An overwhelming majority of panelists believes that central bank independence is very important to fostering supportive business conditions. Eighty-four percent believe central bank independence is “Very Important,” and 10% think it is “Important.”