Key findings
- Optimism about the state of the economy sharply declines, with three in ten small business owners (30%) saying that the economy is “excellent” or “good”, down from 39% the previous quarter
- Most small business owners (70%) believe the country is heading towards a recession
- Two in three (66%) small business owners have been, or expect to be impacted by tariffs, and three in five (59%) express concern about the impact of tariffs on their business
- More than half (60%) of small business owners are stressed about their business’ finances
- Inflation remains the top concern for small business owners, while anxiety over tariffs intensify
- Women small businesses owners are less optimistic than men about the economy
Three in ten small business owners (30%) are optimistic about the state of the economy, down from 39% the previous quarter
Three in ten small business owners (30%) view the economy as ‘excellent’ or ‘good’, with optimism split along party lines: only 8% of Democrats say the economy is currently good or excellent, down from 51% in Q1, while 52% of Republican small business owners have a positive view of the economy, twenty one points higher than in the previous quarter (31%). Nearly three in four (70%) small business owners think the country is headed for a recession: nearly all (95%) Democrats foresee a recession, while nearly half of Republicans do (47%) despite their optimism.
Fears about inflation flare up again as 72% expect the price of goods to rise, up from 63% the previous quarter; 27% think inflation has peaked, down from 36% in Q1. Inflation also remains small business’ biggest concern, with one in four (24%) citing rising prices as the biggest risk to their business currently. Notably 17% cite tariffs as their biggest risk, on par with consumer demand (18%) and up 7 points from the previous quarter (10%).
Inflation remains small business owners’ biggest source of stress when compared to interest rates and tariffs: 52% say inflation contributes most to their business’ financial stress, ahead of tariffs (26%) and interest rates (19%).
Anxiety grows as small business owners brace for impact from tariffs
Two in three (66%) small business owners expect Donald Trump’s tariffs to impact their business, with 31% saying that tariffs have already impacted their business, and 35% bracing for impact in the future.
More than half (59%) express concern that Donald Trump’s tariffs are or will be impacting their business, and 54% oppose the tariffs (vs. 45% support), with support split along party lines: 95% of Democrats oppose, while 84% of Republicans support.
Women small businesses owners are less optimistic than men about the economy
Only one in five (21%) of women small business owners say that the economy is “excellent” or “good”, compared to 34% of men. Similarly, they are more likely to believe that the US is heading toward a recession (76% vs.67%) and are more likely to cite inflation as a risk to their business (27% vs. 22% for men).
- 69% of women small business owners feel stressed about their business’ finances these days, compared to 55% of men.
Support for President Trump and his proposed tariffs are also lower among women:
- 63% of women small business owners oppose his tariffs, compared with 48% of men.
- 39% of women small business owners approve of Trump’s presidency so far, compared to 54% of men.
Small Business Confidence declines sharply to 51, down from 56 the previous quarter, as small businesses experience negative sentiment across nearly all business conditions, including future business revenue, employment, and technological innovation, government, and trade policy.
- 36% describe current business conditions as good, down from 42% the previous quarter.
- 41% expect business revenue to increase in the next 12 months, down from 52%.
- 22% expect to increase employment in the next 12 months, down from 28%.
- 44% expect government regulations in the next 12 months to have a negative impact on their business, up from 38%.
- 37% expect tax policy in the next 12 months to have a negative impact on their business, up from 33%.
- 51% expect trade policy in the next 12 months to have a negative impact on their business, up from 43%.
- 38% expect technological innovation in the next 12 months to have a positive impact on their business, down from 42%.
Small business owners across the political spectrum see declining sentiment, with Democrats declining from 37 to 33 the previous quarter, Republicans 72 to 68, and Independents 51 to 45. Confidence in President Trump starts off with 48% of small business owners approving and 51% disapproving of the way he is handling his job as president.
Weighting
Data for small business statistics have been weighted according to business and owner characteristics (industry, number of employees, geography, gender, and race) according to the 2022 Census Bureau’s Annual Business Survey (ABS).
Index calculation
The final small business confidence index (SBCI) is calculated according to the following formula:
Where A, B, C, D, E, F, G, H are responses to the following
questions, with values of 2 assigned to positive responses (Good, Increase, Positive effect), 1 assigned to middle values (Middling, Stay the same, No effect), and 0 assigned to negative values (Bad, Decrease, Negative effect).
A = Overall, would you describe current conditions for your business as good, middling or bad?
Good
Middling
Bad
B = In the next 12 months, do you expect your business’s revenue to increase, stay the same, or decrease?
Increase
Stay the same
Decrease
C = In the next 12 months, do you expect your business’s staff of full-time employees to increase, stay the same, or decrease?
Increase
Stay the same
Decrease
D = In the next 12 months, do you expect changes in government regulations to have a negative effect, no effect, or a positive effect on your business?
Negative effect
No effect
Positive effect
E = In the next 12 months, do you expect changes in tax policy to have a negative effect, no effect, or a positive effect on your business?
Negative effect
No effect
Positive effect
F = In the next 12 months, do you expect changes in trade policy to have a negative effect, no effect, or a positive effect on your business?
Negative effect
No effect
Positive effect
G = In the next 12 months, do you expect changes in technological innovation to have a negative effect, no effect, or a positive effect on your business?
Negative effect
No effect
Positive effect
H = In the next 12 months, do you expect changes in immigration policy to have a negative effect, no effect, or a positive effect on your business?
Negative effect
No effect
Positive effect
This quarter, less than 1% of respondents skipped one or more of the index questions A-H. In order to calculate an index, we impute these missing values by assigning them to the middle value for each question. These imputed values are only used for index calculation, not in any crosstabs or in the full banners.
