Conditions Improved for Small Businesses in Q2

Small business owners’ concerns about inflation have receded from record highs as overall conditions improved in the second quarter of 2025, according to the MetLife and U.S. Chamber of Commerce Small Business Index.

The index rose to a score of 65.2 for Q2, up from 62.3 in the first three months of the year. The jump was driven by improvements in several areas. Namely, 73 percent of small businesses said they are comfortable with their cash flow, up from 66 percent last quarter. Additionally, confidence in business health rose from 63 percent in Q1 to 69 percent in Q2, and the number of small businesses expecting to increase their staff in the next year went from 37 percent to 42 percent. Those increases also led to a better outlook for the economy, with 34 percent of small businesses now believing the economy is in good health, up from 29 percent last quarter.

As conditions improve, the severity of challenges small businesses face is also changing. Inflation remained the top concern, but the number of respondents citing it as their primary challenge fell to 48 percent — a 10-point drop from Q1. Instead, more businesses are shifting their focus to other challenges, such as the supply chain (17 percent) and employee retention (16 percent), which both saw upticks in Q2. Nearly half (47 percent) of small businesses said they altered their supply chains in the past six months, and 30 percent reported being unable to meet customer demand due to these disruptions.

“Small businesses are cautiously navigating a complex economic landscape,” said Tom Sullivan, senior vice president of small business policy at the U.S. Chamber of Commerce. “While they are confident in their business operations — especially at the local level — when it comes to long-term planning, there is some hesitation as inflation concerns linger and new trade policies create economic uncertainty.”

The full Q2 Small Business Index report is available here.