After President Donald Trump’s wave of economic policies spurred a shock in the business community, sentiment is improving.

The Leeds Business Confidence Index — a measure of how business leaders across Colorado feel about the future of the national and state economy — rebounded ahead of the third quarter of the year, according to a report from the University of Colorado Boulder released Tuesday.

Overall sentiment is still negative though.

After the first quarter of the year, when Trump went into office, the index fell from a score of 50 (the neutral baseline) to nearly 32. It was the index’s third-lowest score ever following the 2008 recession and the COVID-19 pandemic.

Economists behind the survey of business leaders attributed the sudden dip to a shock of uncertainty from tariffs and federal contract cuts, even as other economic metrics lacked clear signs of a recession.

Going into the third quarter, the index score improved to nearly 38.

Colorado business confidence falls dramatically as Trump policies spur ‘shock’ of uncertainty

The index is an important tracker of how business leaders are feeling and a low score could signal companies may pause expansions, investments or hiring: And those delays could further slow the economy.

Business leaders in the survey expressed they’re holding out for more clarity, said Adam Illig, CU Boulder data scientist.

“I think this final quote really kind of captures the general sentiment: ‘Caution will prevail until trade agreements are complete’,” he said.

While business confidence is still down from a year ago, CU Boulder economist Brian Lewandowski said the improvement is in line with several areas of the economy continuing to be resilient.

The nation’s gross domestic product may have been negative and consumer consumption slowed, but he said the stock market and hiring continue to grow.

Most business leaders who took the survey said they have negative expectations for federal policies, especially on matters of trade, federal contracts and grants, immigration’s effect on the labor supply and health care.

Overall, business sentiment had been pessimistic for the past few years during the period of high inflation during President Joe Biden’s presidency, but business leaders in the survey were growing more optimistic in 2024 as prices stabilized.

Colorado businesses starting to feel good about the economy again, report shows

The quick drop in confidence reversed some of the gains made last year as optimism has fallen for every category the index tracks, from expectations for industry sales, profits to future hiring. Most categories rebounded in the second quarter, but their scores still remain below what they were during the same time in 2024.

One thing of note is that the Colorado index is more pessimistic about the economy than other similar national surveys, Wobbekind said, and it’s not clear why.

“I can’t help but wonder if it’s because people are expecting more in terms of the contracts effect,” he explained, citing layoffs at the federal labs and offices could impact businesses in Colorado Springs, Boulder and Lakewood.

“Our numbers are lagging a little bit, but usually people are feeling better about Colorado,” Wobbekind said. “So it could be a wide variety of factors.”