This is the published version of Forbes’ CEO newsletter, which offers the latest news for today’s and tomorrow’s business leaders and decision makers. Click here to get it delivered to your inbox every week.
A new study from insurance company Sentry underscores a point that is likely to become a theme this year: Executives are optimistic about how their businesses will fare in 2025, but they’re also a lot more stressed. While almost half of the 1,000 executives and business leaders said they think their business will thrive this year, two-thirds are more anxious than they were at this time in 2024.
The stress comes from many places. A total of 47% are under duress because of economic uncertainty, while almost as many—44%—say supply chain challenges keep them up at night. Other major stressors are financial—41% are concerned about the cost of employee health care and 36% point to inflation. More than a third are worried about labor shortages.
The stress and uncertainty are keeping some executives from doing anything except working harder. Nearly all—97%—said they’ve deferred needed upgrades to their equipment, technology, cybersecurity or facilities. And almost half are asking employees to work longer hours.
Findings of AlixPartners’ annual disruption index echo these concerns. Following the 2024 presidential election, the number of U.S. leaders who said they were more anxious doubled, from 23% at the beginning of 2024 to 46%. In that survey, 27% were concerned about shifting their manufacturing and supplier footprints, and 23% felt they needed to modify growth plans in response to U.S.-China relations. About 15% more said they needed to change their business model faster, and 12% fewer expect revenue growth this year.
The whiplash of 2025 may end as the year goes on, or businesses will get used to the economic climate. However, the stress could burn some executives out quickly. The current average tenure of a C-suite leader is about four years, according to an analysis published last year in SHRM’s Executive Network, but in times of tumult and stress on business, it has historically been shorter.
One aspect of business that has seen significant change is support for diversity, equity and inclusion initiatives. In the last year, many companies have moved away from their policies, and in his first weeks in office, President Donald Trump outlawed them in government. I talked to Cynthia Soledad, Egon Zehnder’s global head of DEI, about how this sentiment is reflected in boards of directors and C-suites. An excerpt from our conversation is later in this newsletter.
ECONOMIC INDICATORS
Considering the hours he devoted to talking about tariffs on the campaign trail and the massive changes made by executive orders so far, it’s almost surprising that Donald Trump waited two weeks to enact the trade taxes. The first targets were initially Canada and Mexico, which will see a 25% tariff on most imports starting on Tuesday, as well as China, which will get an additional 10% tariff. (Canadian oil tariffs will only be 10% to “minimize any disruptive effect” on U.S. gas prices.) Monday morning, Trump granted Mexico a one-month reprieve in exchange for 10,000 Mexican soldiers being deployed to the border to protect against drug trafficking.
On Sunday, Trump acknowledged that tariffs may cause “some pain,” but said it “will all be worth the price.” Most economists say tariffs tend to get passed through to the consumer, increasing prices for all Americans. Meanwhile, Canadian leaders have proposed a list of U.S. goods that will see their own 25% tariffs—including some food items, plastics, rubber, lumber and glassware.
The tariffs were immediately felt on the stock market. Trump’s announcement affirming the tariffs Friday afternoon quickly erased a positive day on Wall Street, with all three major indexes tumbling. On Monday morning, the S&P 500, Dow Jones Industrial Average and Nasdaq were all down more than 1%, with alcohol companies, vehicle manufacturers, tech companies and cryptocurrency seeing the biggest losses.
The reaction to the tariff announcement reinforces the Federal Reserve Open Market Committee’s decision last week to hold interest rates steady at 4.25% to 4.5%, the first meeting since July at which rates were not cut. In the announcement, the committee noted unemployment “has stabilized at a low level” and “inflation remains somewhat elevated.” Commerce Department data released on Friday showed that inflation remained sticky, with the personal consumption expenditures index at 2.6% in December, and GDP only rose 2.3% in the fourth quarter, slower than expected. Trump responded to the Fed’s decision with a Truth Social post saying the body “has done a terrible job on Bank Regulation.”
RETAIL + COMMERCE
It is not expected to be a good year for retail. A study from Coresight Research predicts that 2025 is on track to see twice as many stores close as 2024, writes Forbes senior contributor Pamela Danziger. Up to 15,000 stores may close this year, while only about 5,800 could open. The study found that inflation, easy online shopping deals and suboptimal in-store customer experience are contributing to the closures.
The year has already seen quite a bit of M&A in the retail space, Danziger writes. The biggest to date is JCPenney merging with the SPARC Group into Catalyst Brands. Higher-end brands have also been making deals—like Vera Wang’s acquisition by WHP Global, Stella McCartney buying back LVMH’s stake, Christian Lacroix’s sale to Sociedad Textil Lonia and Laura Ashley’s acquisition by Marquee Brands. Other brands that have been bought so far include Kapital, True Religion and Urban Skin RX.
HUMAN CAPITAL
Polling has shown that recent union success has increased the number of Americans who like them, with workers unions receiving a 70% approval rating on a Gallup poll, writes Forbes senior contributor Teresa Ghilarducci. According to the Labor Department, 9.9% of the workforce was in a union in 2024, down slightly from 10% the year prior. But organized labor may face an uncertain future. Last week, Trump fired Democrat National Labor Relations Board member Gwynne Wilcox, leaving the board with just two members and unable to conduct business. Her dismissal may be challenged in court.
In the last week, organized labor had earned some big wins. Costco reached a last-minute tentative contract agreement with about 18,000 employees in the International Brotherhood of Teamsters union, averting a strike that would have started over the weekend, affecting more than 50 Costco locations nationwide, writes Forbes senior contributor Pamela Danziger. Employees at a Philadelphia Whole Foods location also voted last week to join the United Food and Commercial Workers union, Danziger writes. The next step is for the union to negotiate a contract with the grocery chain’s owner, Amazon, which has just one unionized warehouse under its flagship business.
TOMORROW’S TRENDS
Despite DEI Scrutiny, ‘Inclusive Culture, Diverse Representation’ Are Still Important, Leadership Expert Says
As scrutiny of diversity, equity and inclusion programs increased in 2024, the number of diverse individuals newly appointed to corporate boards decreased, though boards are more diverse than they were 12 years ago, leadership firm Egon Zehnder found in their 2024 global board diversity tracking report. President Donald Trump has also focused a number of executive orders on the topic in his second term. I talked to Cynthia Soledad, Egon Zehnder’s global head of DEI, about what this report means for diversity on boards, C-suite and corporate offices.
This conversation has been edited for length, clarity and continuity. A longer version is available here.
There’s been a lot of demonizing DEI, but when you look at companies, a recent LinkedIn study showed nearly no companies cutting back on DEI. From where you sit, how does it break down? What are the actual feelings about DEI, both for boards and for corporations?
Soledad: Starting with the corporate practices, I would say that the headlines are exaggerated. What is being called in a headline a “pullback” on DEI practices is usually not that. DEI work has evolved over time, particularly as regulatory and legal changes happen. For example, the affirmative action ruling a few years ago, and the subsequent legal test cases around corporate practices that look similar to affirmative action. Those regulatory shifts and changes in test cases do require companies to evaluate their practices and ask, ‘Is there anything that we would want to adapt and change because the regulatory environment’s changing?’
That’s most of what I am hearing from the clients we work with: an evaluation given regulatory changes in the environment, not at all a rollback in terms of the importance of inclusive culture, diverse representation and continued investment.
There is also a concern that, because of these headlines and sound bites, DEI is under attack and it affects morale. Companies are concerned that their employees will read these headlines and feel that these investments in inclusive culture are at some risk. I also am hearing from CHROs and DEI officers and CEOs that they are very focused on keeping employee engagement high, and helping those employees understand their levels of investment in DEI.
How do you see President Trump’s DEI policies in the federal government impacting the private sector? How about C-suites and boards?
There is a ripple effect in the private sector partly because so many companies serve the federal government in some capacity, and these policies impact suppliers. In addition, these actions are obviously intended to sway public opinion. Even those companies who do not have government contracts will take note of the rhetoric, and their behavior could be influenced by the fear it is intended to create.
The most direct possible impact is on corporate policies that influence supplier diversity, talent, and culture; impact to board diversity efforts could be softer. Nonetheless, these efforts are at some risk.
Where do you see things going with the conversation around diversity, both as a policy in corporations, as well as with boards, in 2025?
We can expect the landscape to continue to be fraught for the next year on this topic, with potentially more legal challenges to come. Because of this, companies will have to keep evolving their approaches.
The commitment that companies, corporate leaders and board leaders have made to diversity and inclusion in companies is real. There is a core belief that companies are serving diverse customer bases, companies already have more diverse workforces than they have historically, and that they want to hold onto the best talent that they can. The core practices will remain steady. Companies are continuing to invest in building diverse pipelines of talent all the way up to the top, all the way up to board representation. Leaders say they want to protect that work, and to try to move through all of the distracting headlines as quickly as possible and stay focused on the core work.
FACTS + COMMENTS
Apple reported record quarterly profits last week, but in some areas it missed analysts’ expectations.
$124.3 billion: Net sales in the most recent quarter, up 4% year-over-year
11%: Year-over-year decline in China sales
‘Where we launched Apple Intelligence, performance outpaced the markets where we did not’: CEO Tim Cook said on the earnings call
STRATEGIES + ADVICE
The board of directors is more than just a check on the CEO nowadays. Here are ways to work with the board for the best business outcomes.
Yum Brands founder and former CEO David Novak shares a key secret to being a successful business leader: Giving employees recognition.
VIDEO
QUIZ
On Tesla’s earnings call last week, CEO Elon Musk announced the month he believes Tesla’s unsupervised robotaxi will launch in Austin, Texas this year. When did he say it will happen?
A. April
B. June
C. September
D. November
See if you got the answer right here.