Small business confidence declines as inflation concerns rise in the US

WASHINGTON — Confidence among U.S. small businesses declined for a second straight quarter as concerns about inflation and the broader economy increased, according to the U.S. Chamber of Commerce Small Business Index for the first quarter of 2026.

The index fell to 67.0, down from 68.4 in the previous quarter and below its recent high of 72.0 in the third quarter of 2025. The score remains above its level from a year earlier.

The data show a widening gap between how small businesses view their own operations and how they view the overall economy. About 69% of owners said their business is in good health. In contrast, 28% said the U.S. economy is in good condition, down 10 points from the previous quarter. Confidence in local economies also declined, with 35% rating conditions as good, down 8 points.

“While many small businesses say their own operations remain stable, the data show a clear downturn in sentiment that shouldn’t be overlooked,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce.

Small businesses are also scaling back their growth plans. About 37% said they expect to increase investment, down from 44% last quarter. About 30% plan to add staff, a 12-point drop from the fourth quarter of 2025. Revenue expectations have also eased, with 61% anticipating increased revenue, down from 65% last quarter and 69% a year earlier.

Inflation remains the top concern, cited by 53% of small business owners, up from 45% in the previous quarter. Concerns about the cost of employee benefits are also rising, with 19% citing benefits or health care as a top challenge, the highest level recorded since tracking began in 2023.

“The biggest challenge facing our business right now is financial uncertainty in the economy which is causing tightening on discretionary spending,” said Chris Barber, chief nerd at Cheaper Than A Geek in Crofton, Maryland.

The findings suggest growing caution among small businesses as inflation pressures persist and expectations for hiring, investment and revenue continue to soften.