Small Business Outlook: Cautious Optimism Continues

Small business optimism in Q1 is high and the expense of finding, hiring, and retaining qualified workers may be a wet blanket on growth.

Supreme Court Tariffs Decision: While we will learn more about the refund process in the days ahead, this guide provides information to help small businesses identify whether they paid IEEPA‑based tariffs and prepare for the emerging refund process.

Navigating the New Tax Law: Don't miss our practical guide to maximizing savings for your small business under the “One Big Beautiful Bill Act.”

ICYMI: As the United States approaches its 250th anniversary, U.S. Chamber of Commerce President and CEO Suzanne P. Clark unveiled a bold vision for how the business community can help shape the nation’s next chapter. Watch here.

New Small Business Data

National Federation of Independent Business Industry Specific Report (February 25, 2026)

Summary: From November 2025 to January 2026, small business optimism increased in manufacturing, retail, and services, but dropped in the construction sector due to a deterioration in hiring plans.

• 21% of small businesses in construction plan to hire in the next 3-months (14 points lower than last quarter) and 23% expect sales to increase (5 points higher than last quarter).
• 20% of small construction firms (compared to 15% of all firms) believe now is a good time to expand (no change from last quarter).
• 24% of small businesses in manufacturing plan to hire in the next 3-months (no change from last quarter) and 24% expect sales to increase (18 points higher than last quarter).
• 19% of small manufacturers (compared to 15% of all firms) believe now is a good time to expand (4 points higher than last quarter).
• 8% of small businesses in retail plan to hire in the next 3-months (3 points higher than last quarter) and 16% expect sales to increase (11 points higher than last quarter).
• 7% of small retailers (compared to 15% of all firms) believe now is a good time to expand (1 point less than last quarter).
• 16% of small businesses in the services sector plan to hire in the next 3-months (2 points higher than last quarter) and 18% expect sales to increase (21 points higher than last quarter).
• 13% of small service firms (compared to 15% of all firms) believe now is a good time to expand (4 points higher than last quarter).

Citizens Small & Midsize Business Outlook (February 25, 2026)

Summary: Small businesses are bullish about Q1, with larger small businesses expressing the greatest confidence.

• 77% of small business owners expressed confidence in the Q1 economic outlook.
• 86% of small business owners with revenues over $5 million expect increased revenues in Q1 and 64% of owners with under $5 million in revenues expect a Q1 increase.
• 68% of small business owners expect to hire in Q1 and 58% report difficulty finding qualified job applicants.
• Inflation continues to top the list of concerns by small businesses, followed by managing the impacts on tariffs, coping with economic uncertainty, finding and keeping customers, and integrating technology advancements (in descending order of importance).
• Almost 60% of small business owners report that tariffs have increased or will increase their businesses’ costs in Q1.
• When asked about Q1 spending prioritization, small business owners cited technology as their top spend, followed by marketing, followed by staffing costs (hiring, retention, and upskilling).
• 71% of small business owners have or are working on a succession plan and 77% of the youngest CEOs (ages 18-24) have an exit plan.

Small Business & Entrepreneurship Council Check Up Survey (February 24, 2026)

Summary: Inflation remains top of mind for small business owners and a majority of Main Street employers expect a positive 2026.

• 71% of small business owners reported their 2025 financial performance was better than 2024.
• 92% of small business owners reported that they are currently stable or growing.
• 61% of small business owners have experienced positive cash flow effects from the new tax law and 73% of small business owners believe they will receive tax savings this tax season.
• 48% of small business owners view the current economic climate as good or excellent and 52% believe their own businesses’ financial position will improve this year.
• 73% of small business owners remain concerned about inflation, with 46% of small business owners believe inflation has risen over the past 6-months and 51% believe it has eased.
• 62% of small business owners expressed concern over tariff policies and 11% report that tariffs have a significant negative impact on their businesses.
• 77% of small business owners report AI usage and 56% report that AI is creating new opportunities for their teams without reducing headcount.

Small Business Fast Facts

Small Business Data Center

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WSJ/Vistage Small Business Small Business CEO Confidence Index (February 18, 2026)

Summary: Main Street confidence continues to rise and small employers remain cautious about expanding their workforce.

• 27% of small business owners say the economy has improved compared to a year ago (3 points higher than January) and 30% say the economy has gotten worse (4 points better than January).
• 36% of small business owners believe the economy will improve in the next 12 months (2 points higher than January) and 21% believe the economy will worsen (2 points better than January).
• 55% of small businesses plan on increasing employees in the next 12-months (5 points higher than January) and 9% plan on decreasing employees (2 points higher than January).
• 34% of small businesses are expecting to increase fixed investments (2 points higher than January) and 50% expect fixed expenditures to remain the same.
• 71% of small businesses expect increased revenues in the next 12 months (4 points higher than January) and 8% believe revenues will decrease (2 points better than January).
• 60% of small business owners believe profitability will increase in the next 12 months (4 points higher than January) and 8% believe that profitability will decrease (5 points better than January).
• 49% of small business owners anticipate tax savings from the new tax law and 33% do not.

Fiserv December Small Business Index (February 3, 2026)

Summary: Consumer spending held steady to start the New Year.

• Month-over-month sales at small businesses decreased slightly in January after December’s slight rebound (-0.5% change) and year-over-year sales at small businesses continued to go up (+0.7% change) compared to January 2025.

U.S. Small Business Administration Office of Advocacy FAQ 2026 (February 3, 2026)

Summary: New businesses are on the rise and small businesses continue to be America’s economic engine.

• There are more than 36 million small businesses in the United States.
• Small business is defined generally in the United States as firms with fewer than 500 employees.
• Over 82% of small businesses are nonemployer firms and over 17% are employer firms.
• From January 1995 to December 2024, small businesses accounted for 61% of net new job creation in the United States.
• According to the most recent data available, over 67% of new employer firms survive at least 2-years and over 49% survive for 5-years. Two thirds of businesses that reach the 5-year mark last 10-years or more.

2025 OnDeck + Ocrolus Small Business Q4 Cash Flow Trend Report (January 28, 2026)

Summary: Main Street confidence continued to steadily rise throughout 2025 as did AI adoption.

• 94% of small businesses anticipate moderate to significant growth over the next year (1 point higher than last quarter) and 29.1% anticipate significant growth (1.9 points lower than last quarter).
• 31% of small business owners cite Inflation as their highest concern (1 point higher than last quarter).
• 60.7% of small business owners will pay down existing debt with any excess cash flow realized from 2025. 18.8% will build cash reserves. 6.6% will increase capital investments. 4.3% will increase marketing or customer acquisition spending. 3.4% will hire more staff and 2.6% will raise wages.
• 44% of small business owners reported changing their business operations to mitigate negative impacts caused by tariffs. The most common changes were passing along price increases to customers (30.3% of those who changed operations), seeking alternative suppliers (13%), and adding products or services (9.4%).
• 56% of small business owners have incorporated Artificial Intelligence (AI) into their operations (4 points higher than last quarter).

Honoring America's Top Small Businesses

Celebrating America's Top 100 Small Businesses

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GoDaddy Small Business Research Lab | 2025 Year-End Report (December 22, 2025)

Summary: Annual study of small businesses (5,000 in 2025) that have a GoDaddy domain and an active website. Microbusinesses’ (fewer than 10 employees) impact on job creation and increased household income for surrounding communities is on the rise.

• 65% of those surveyed are first-time business owners. 95% of those surveyed have fewer than 10 employees and 65% are solopreneurs.
• 45% of those surveyed say their business is main source of income. 40% use business revenue as supplemental income and 15% say their business provides no income.
• Microbusinesses (defined as having fewer than 10-employees) created more than 8 new jobs in their respective county in 2025 (analysis by GoDaddy/UCLA Anderson Forecast Microbusiness Activity Index). That is an increase of 6 jobs per county compared to 2020.
• Every 1% increase in household microbusiness ownership within a community correlates with 2% rise of income (approx. $1,500 over 3-years).
• 29% of small business owners believe 2025 end-of-year sales will be higher than 2024. 26% believe sales will be lower and 37% expect same level of sales year-over-year.
• 66% of small business owners believe that revenue over the next 6-months will be steady or increase. 24% believe revenue will decrease.
• 2/3 of small business owners say most of their customers live within their city or state and 69% rely on domestic supply chains. 78% of small businesses do not export their goods or services.

MetLife & U.S. Chamber of Commerce Small Business Index for Q4 (December 10, 2025)

Summary: Index shows a dip in confidence, revenue expectations, cash flow, and plans for investment. Inflation remains the top concern albeit trending downward. Note: Survey was in the field during the government shutdown.

• 70% of small businesses are confident in the health of their own business (2 points lower than last quarter) and 74% are comfortable with their current cash flow (2 points lower than last quarter).
• 43% of small business owners are positive about the health of their local economy (3 points lower) and 28% are negative (4 points worse than last quarter).
• 38% of small business owners are positive about the nation’s economic health (2 points lower than last quarter) and 44% are negative (2 points worse than last quarter).
• 45% of small business owners rank inflation as their top concern (1point lower than last quarter and the 16^thconsecutive quarter where inflation tops the list).
• 65% of small business owners expect to increase revenue in the next year (4 points lower than last quarter).
• 23% of small business owners reported adding staff over this past year (5 points less than last quarter) and 68% reported keeping the same number of staff (4 points higher than last quarter).
• 42% of small business owners expect to increase staff in the next year (2 points lower than last quarter) and 49% expect to maintain current staffing levels (3 points higher than last quarter).
• 17% of small business owners cited employee retention as their top concern (highest level in 8 ½ years).

Explore More Small Business Insights

The U.S. Chamber's SVP of Small Business Policy Tom Sullivan appears regularly on ASBN - America's Small Business Network and hosts a weekly podcast to deliver fresh insights on small business to viewers and listeners nationwide.

Watch Tom Sullivan talk all things small business with Jim Fitzpatrick on ASBN (America's Small Business Network), including the latest news and policy updates for Main Street business owners. New episodes are added every month so that you can watch them anytime.

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About the author

Thomas M. Sullivan

Thomas M. Sullivan is senior vice president of small business policy at the U.S. Chamber of Commerce. Working with chambers of commerce and the U.S. Chamber’s nationwide network, Sullivan harnesses the views of small businesses and translates that grassroots power into federal policies that bolster free enterprise and reward entrepreneurship. He runs the U.S.

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