Writer: Ryan Gandolfo
July 2025 — Business and economic sentiment wavered slightly in the second quarter of 2025 as leaders pointed to ongoing macroeconomic uncertainty, according to a new survey from caa.
Geopolitical tension, shifting trade dynamics, and the first reported GDP contraction since 2022 (-0.5%) shaped macro sentiment, while industry leaders remained positive on company outlook but less rosy on regional economic sentiment, hiring plans, and local government support.
“The current economic climate is not for the faint of heart,” said a Philadelphia-based bank president and CEO to Invest:. “Businesses and individuals alike must be willing to adapt, take calculated risks, and persevere through uncertainty.”
At the latest FOMC meeting on June 18, the Federal Reserve decided against cutting its federal funds rate, maintaining a 4.25-4.5% range. The central bank cited a slightly elevated inflation rate as part of its decision to stand pat.
The survey of public and private sector leaders was conducted from April 1 through June 22 and compiled in the Invest: Business Sentiment Survey (I:BSS). Respondents, on average, ranked the strength of their regional economy 3.94 out of 5 (5 being the highest). The latest figure represents a slight decrease from the previous quarter.
Three out of four (75%) survey respondents viewed their regional economy as strong (4 or 5 out of 5), with Southern market leaders posting the most positive sentiment at 86%, while their Northern counterparts were less convinced — only 58% ranked their regional economy as strong.
Overall optimism in Southern markets can be attributed to significant infrastructure investment at the local level. “A key focus is expanding infrastructure to support this growth while modernizing aging systems,” said a Central Florida-based city manager to Invest:. “Our water and wastewater transmission lines — some over 80 years old — are being upgraded alongside expansions in electricity, transportation, and other essential services. This ensures we meet both current and future demand.”
Nationwide, infrastructure (transportation and water) investment reached $625 billion in 2023, up $35 billion from the annual average in the 2010s, according to Brookings Metro. While federal infrastructure funding rose with the rollout of the Infrastructure Investment and Jobs Act (IIJA), state and local governments accounted for nearly $4 in every $5 of all public infrastructure spending.
In terms of organizational performance, both Northern and Southern market leaders held overwhelmingly strong views, with 90% and 92%, respectively, ranking their firm’s performance over the past six months at 4 or higher.
For one Philadelphia-based commercial real estate office, nearly 9 in 10 (89%) agents have performed better compared to 2024. “This success can be attributed to two primary factors. First, there has been a rebound in the market. Second, our agents doubled down on their efforts, whether through increased outreach, more meetings, or a commitment to skill development and training,” the regional manager told Invest:.
According to the CBRE Lending Momentum Index, lending activity increased by 13% from 4Q24 to 1Q25 and 90% year over year. The index tracks the pace of CBRE-originated commercial loan closings in the United States.
While confidence in company performance remained high, labor market enthusiasm remained lower, on average, in the second quarter as decision-makers showed less interest in hiring compared to recent quarters. In Southern markets, 59% of survey respondents ranked hiring expectations over the next six months at 4 or higher, compared to 73% in Northern markets. Overall, 65% of executives anticipate hiring more staff in the next six months.
Nationally, the number of job openings has remained steady through the first four months of 2025. The U.S. Bureau of Labor Statistics reported 7.4 million job openings in April, down from 7.6 million in February.
While the hiring outlook remains steady, leaders are more aligned on local government support. Nearly two-thirds (65%) of leaders rated local government support at 4 or 5 out of 5.
From the private sector, leaning into partnerships with local governments has proven to be a worthwhile strategy for firm and market growth. “Our continued involvement with local and state governments has positioned us to contribute meaningfully to Florida’s long-term development,” said a South Florida-based law firm managing partner to Invest:. “These partnerships ensure that our clients’ projects not only succeed but also positively impact the broader community.”
For more I:BSS reports, click here.
