Economic Uncertainty Making Small Businesses More Cautious on Growth Plans

Small businesses are growing more cautious about the future, with fewer planning to expand payrolls or make new investments, according to the U.S. Chamber of Commerce Small Business Index for Q1 2026.

While the overall index of 67 was only 1.4 points lower compared to Q4 2025, ongoing global conflicts and the corresponding inflation and business disruptions appear to be creating more unease about the economy. Only 37% of small businesses said they expect to increase investment in the year ahead, down from 44% last quarter, and only 30% expect to increase staff, a 12-point drop.

“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, executive vice president, chief policy officer, and head of strategic advocacy at the U.S. Chamber of Commerce. “This survey was conducted largely after the outbreak of military conflict with Iran, and that uncertainty is clearly weighing on confidence. Views of the national and local economies have turned more pessimistic, concerns over inflation have jumped, and plans for future hiring and investment dropped markedly. Taken together, this suggests small business owners are worried about the future state of the economy, but it remains to be seen if this will translate into changes in their current operations.”

The U.S. Chamber's analysis noted a divergence between how small businesses view their own operations and how they assess the broader economy. Sixty-nine percent of respondents rated their business as being in good health, while only 28% said the same about the U.S. economy — a 10-point decrease from Q4 2025.

Inflation is the top challenge facing small businesses, with 53% saying it was their biggest concern, up from 45% at the end of last year. It has been a persistent issue, now ranking as the leading challenge for 17 consecutive quarters. But inflationary costs are not the only expenses businesses are worried about. Nineteen percent said affording employee benefits or health care is a top challenge, the highest reading since tracking began in 2023.

The full Q1 U.S. Chamber of Commerce Small Business Index report is available here.