Massachusetts employers weren’t in a very festive mood for the holidays as business confidence ended 2025 in pessimistic territory for the tenth consecutive month.

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 1.7 points to 46.8 on a 100-point scale during December. The Index ended the year 8.6 points below its level a year earlier.

The December decline was driven by falling levels of confidence in the overall Massachusetts and US economies. The Massachusetts and US indices both fell more than 15 points from a year earlier, despite continued signs of resilient consumer activity and steady business investment.

“Consumer spending has remained relatively resilient, supported by steady job growth, rising real wages in some sectors, and strong balance sheets among higher-income households. Corporate investment, particularly in technology and artificial intelligence, continues to provide pockets of momentum. These factors suggest an economy that is slowing but still expanding, avoiding the downturn many feared earlier, said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

Companies that participated in the BCI expressed growing concern about the cost of doing business.

“Expenses seem to keep creeping up higher. This year our commercial property insurance doubled. (We’re) worried that our health insurance premiums will also increase a lot. Supply costs have gone up around 20 to 30 percent,” wrote one company.

Another commented: “We are losing too many people (aged) 18 to 50 moving out of state due to housing and over taxation. Massachusetts should be doing a better job for residents. And the permitting process to build needs to be streamlined and reduced.”

The AIM Index, based on a survey of more than 140 Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions, 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators

The constituent indicators that make up the Index were mostly lower in December.

The confidence employers maintain in their own operations fell 0.3 point to 51.4. That figure was 4.0 points less than in December 2024.

The Massachusetts Index, assessing business conditions within the commonwealth, declined 5.6 points to 39.6, leaving it well below the 55.0-point level from a year earlier. The US Index measuring conditions throughout the country lost 2.2 points during December and was down 15.7 points for the year.

The Current Index, which assesses overall business conditions at the time of the survey, shed 2.0 points to 46.1. The Future Index predicting conditions for the next six months was off 1.4 points to 47.5.

The Employment Index was steady, losing 0.1 point for the month.

The Manufacturing Index was the sole element to gain ground, adding 5.4 points to 46.7, leaving it 5.6 points lower than a year earlier.

Large companies (48.6) were more confident than medium-sized companies (46.8) and small companies (44.4).

Elmore Alexander, Dean Emeritus of Ricciardi College of Business, Bridgewater State University and a BEA member, said the U.S. economy has been marked by the paradox of a rising stock market and weak confidence on the part of consumers and businesses.

“One concern is that spending is uneven, with many companies reporting a pullback by lower- and middle-income consumers. Another concern is inflation. The core personal consumption expenditure price index (less food and energy) rose 2.9% in the third quarter, versus 2.6% in the second,” Alexander said.

A Year of Important Issues

AIM President and CEO Brooke Thomson, also a BEA member, said Massachusetts businesses will face of bevy of important issues during 2026, from data security to rising costs for health care and energy.

“Add in the possibility that voters may face as many as 11 statewide ballot questions in the fall, and there are many potential issues that are likely to affect business confidence this year,” Thomson said.