Vistage’s Q3 survey shows weaker economic expectations, rising health costs and cautious spending, while many CEOs still plan to hire and grow revenue.
Small and midsize business leaders are still planning for growth, but the economics behind those plans are getting harder to manage. In Vistage’s third-quarter 2026 survey, confidence in the economy fell for a third straight quarter, while rising health care and operating costs continued to squeeze expected profits.
The Vistage CEO Confidence Index dropped to 80.8 from 84.2 in the second quarter, a decline of 3.4 points. The survey, published October 22, also found a widening gap between CEOs’ views of the broader economy and their own businesses: many expect revenue to increase, but fewer anticipate higher profits.
Economic expectations weaken
Nearly half of respondents, 46%, said U.S. economic conditions had worsened compared with a year earlier. Only 14% said they had improved, down five percentage points from the prior quarter.
Looking ahead, 19% expected the economy to improve over the next 12 months. That was 10 percentage points below the second-quarter reading and 13 points lower than in the third quarter of 2025. Meanwhile, 34% expected conditions to deteriorate, an increase of eight points from the previous quarter.
Vistage Chief Research Officer Joe Galvin said economic uncertainty and geopolitical instability had been persistent concerns for business leaders. He pointed to inflation, higher interest rates and energy prices as forces raising costs and compressing margins. The survey suggests those pressures are now shaping decisions on hiring, investment and cash management, rather than remaining abstract concerns about the economy.
Revenue plans outpace profit expectations
Business-level expectations held up better than views of the economy, though they softened. Sixty-two percent of CEOs expected revenue to rise, two percentage points fewer than in the previous quarter. Only 47% expected profits to increase, a sign that sales growth may not translate into stronger earnings when expenses keep climbing.
Fixed investment plans also eased: 36% expected to increase investment over the coming year, compared with 38% in the prior quarter. That combination points to a measured approach. Companies may still see opportunities to sell more, but cost pressure can change which opportunities warrant added spending.
ITR Economics Deputy Chief Economist Eric Post cited increases in materials, labor, electricity and insurance, alongside high interest rates. He cautioned against overestimating what businesses can generate at the top line in 2027 as the economy slows. For operators, the practical issue is whether budgets account for the cost of delivering growth, not just the revenue target.
Benefits costs are a major planning concern
Health care expenses add another complication as businesses approach open enrollment. Seventy-four percent of surveyed CEOs expected health care costs to rise at least 6% next year; 33% anticipated increases above 10%.
Many are reviewing their options. Seventy-one percent planned to seek competitive bids for their health benefits, including 24% considering a change in provider or plan. Just 23% preferred to keep their current plan without shopping around.
Responses included considering self-insurance, captive insurance, level-funded plans, professional employer organizations and individual coverage health reimbursement arrangements. Each option comes with trade-offs for a business, and the survey highlights the tension CEOs described: lowering benefits costs can affect recruiting and retention, while shifting more expense to employees may create its own workforce challenges. The findings don’t establish which approach works best; they show that benefits have become a material part of cost planning.
Higher rates prompt a defensive financial stance
Open-ended survey responses showed CEOs adapting their financial practices to elevated interest rates. Reported steps included reducing debt, avoiding new borrowing, building cash reserves and funding growth from operating cash flow. Some said they were applying stricter standards to capital investments and acquisitions, refinancing debt or locking in fixed rates.
Together, these actions suggest that access to cash and the cost of financing are influencing the pace of expansion. A business can protect flexibility by scrutinizing large commitments, but a more cautious approach may also narrow the projects it can pursue. Vistage’s results describe what respondents are doing; they don’t predict how any individual company’s financing costs or returns will change.
Hiring holds steady as AI use spreads
Hiring intentions were unchanged from the previous quarter: 50% planned to expand their workforces, while 11% expected to reduce staff. That is a relatively firm hiring signal alongside softer economic expectations, though the survey does not specify how many roles companies intend to add.
Use of generative AI among CEOs also continued to rise. Eighty-two percent said they used the technology themselves, up from 76% in the fourth quarter of 2025. Only 3% reported that nobody in their organization used it. Among businesses supporting data centers or AI infrastructure, more than 70% expected that part of their business to grow over the next 12 months.
Demand and staffing remain uncertain
CEOs named finding and retaining qualified employees as a leading challenge. They also described higher costs for labor, fuel, insurance, materials, freight and tariffs. On the demand side, respondents said uncertainty was prompting customers to delay, postpone or cancel orders, and leaving sales pipelines smaller and less dependable.
Since 2003, Vistage has surveyed small and midsize business CEOs each quarter about economic and business conditions. ITR Economics’ rate-of-change analysis has found that the index leads the U.S. Industrial Production Index by nine months, giving the measure a forward-looking role. The Q3 findings put that signal alongside a clear operating challenge: revenue and hiring ambitions remain, but firms are contending with expenses and less predictable customer demand. The next planning cycle will test whether those growth expectations can hold up against both pressures.
Vistage publishes the full Q3 2026 CEO Confidence Index results.
