Tuscaloosa Metro Area Report

Alabama Business Confidence Index™

Second Quarter 2025

Decreased Business Confidence in Q2 2025

Tuscaloosa business leaders are anticipating decreased levels of economic activity in Q2 2025 with a mildly contractionary ABCI of 48.7. After forecasting growth with moderate to strong confidence in Q1 2025, local panelists are feeling much more conservative in Q2 2025. Each of the component indexes decreased this quarter, dropping by as few as 4.3 points (capital expenditures) to as many as 16.9 points (both the US and Alabama economic outlooks). In spite of the overall decreases, two forecasts remain mildly expansionary this quarter: business leaders are still expecting an overall increase in industry sales and capital expenditures in Q2 2025 compared to the previous quarter.

Index above 50 indicates positive outlook as compared to last quarter.
Index below 50 indicates negative outlook compared to last quarter.

Tuscaloosa Component Index Analysis

• Alabama Economy: After five quarters of expansionary Alabama economic indexes, Tuscaloosa business leaders are forecasting worse economic conditions in Q2 2025 with mild confidence. The index decreased 16.9 points from its strongly confident expansionary index of 63.1.
• US Economy: The US economic outlook also dropped 16.9 points to register at a mildly contractionary 46.2 this quarter, with the contractionary forecasts of 38 percent of metro panelists outweighing the 33 percent of expansionary forecasts.
• Industry Sales: At a mildly confident expansionary level of 53.8, the metro’s sales index was the highest industry component index in the Q2 2025 survey despite decreasing 6.8 points from last quarter’s levels.
• Industry Profits: Tuscaloosa business leaders are expecting industry profits to decrease this quarter compared to their Q1 2025 levels with a mildly confident index of 45.5, an 8.9-point decrease from last quarter’s index.
• Industry Hiring: After eight quarters of expansionary forecasts, Tuscaloosa’s Q2 2025 hiring index decreased 5.6 points to register 49.4, indicating a mildly confident contractionary forecast.
• Industry Capital Expenditures: With a mildly confident expansionary index of 51.3, metro panelists are still anticipating increased capital expenditures this quarter despite the index decreasing 4.3 points from Q1 2025.

ABCI Tuscaloosa in Context

In the Q2 2025 survey, Tuscaloosa’s ABCI registered as mildly contractionary. Business confidence in the metro area has been mostly positive for the last six quarters, with five mildly or moderately expansionary ABCIs and only one neutral overall index from Q4 2023 to Q1 2025. Before that, however, Tuscaloosa’s ABCI was contractionary for the first three quarters of 2023, pulled downward by strongly confident contractionary forecasts for the US economy coupled with mildly or moderately confident forecasts for worse economic conditions in the Alabama economy and decreased industry profits, capital spending, or sales. Now, in Q2 2025, panelists are much less confident in their contractionary outlook for the US economy than they were in 2023, but that in addition to multiple mildly contractionary indexes are enough to result in an overall mildly negative index.

Panelists in Mobile had the highest metro ABCI this quarter at 54.4, with more confidence in their forecasts for increased sales, profits, and hiring than the other metro areas. The Birmingham–Hoover ABCI was also expansionary with a mildly confident index of 51.9. The ABCIs for Huntsville, Tuscaloosa, and Montgomery were all below 50, as business leaders forecast worse economic conditions in both the statewide and national economies and the contraction of at least one of their industry indexes.

The Center for Business and Economic Research would like to thank the Alabama business executives who completed the second quarter 2025 ABCI™ survey. This is the 94th consecutive quarter this report has been recorded, and it would not have been possible without your participation.
Be sure to log in during the June 1–15 survey window to record your opinions about economic prospects and industry performance looking ahead to the third quarter of 2025.

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This report was produced in partnership between the Center for Business and Economic Research at the The University of Alabama’s Culverhouse College of Business and the Chamber of Commerce of West Alabama.

Analysis provided by Susannah Robichaux, Socioeconomic Analyst, Center for Business and Economic Research, Culverhouse College of Business, The University of Alabama.