Small businesses in the United States, which employ roughly half of the nation’s workforce and contribute about half of its gross domestic product, are presenting a mixed but generally stable picture as the country approaches the November midterm elections. While overall economic sentiment toward President Donald Trump remains low, small business owners appear cautiously optimistic despite persistent challenges such as inflation and labor shortages.
Recent surveys and economic reports provide insight into the perspectives of this critical voting bloc. The National Federation of Independent Business (NFIB) reported a slight decline in its Small Business Optimism Index this week, falling just below its long-term average. The NFIB noted rising uncertainty among owners, with concerns centered primarily on labor quality, cited by 26% of respondents, and inflation, mentioned by 20%. Although expansion plans have eased, about 17% of businesses still intend to add jobs in the coming three months.
Contrasting with the NFIB findings but reinforcing a broadly steady outlook, the Justworks/US Chamber Small Business Index revealed a significant improvement in confidence during the third quarter. Among the 750 small businesses surveyed, 72% expressed comfort with their current cash flow, though only 27% rated the overall U.S. economy as being in good shape. Inflation remains the most significant challenge, identified by 54% of owners.
Employment data within the small business sector presents a nuanced picture. HR platform Gusto reported that small businesses added 28,000 jobs in September, marking the eighth consecutive month of employment gains after a decline earlier in the year. This growth was observed across industries and regions, with healthcare and social assistance among the strongest sectors. Paychex, another payroll service, indicated that September hiring essentially aligned with the year-to-date average, suggesting a stable employment environment for companies with fewer than 50 employees.
Similarly, ADP, the largest payroll processor in the U.S., recorded 90,000 new private-sector jobs in September. This figure reflected an acceleration in hiring following a slowdown earlier in the year, with small businesses employing between one and 19 workers adding 18,000 jobs. ADP noted that businesses have not entered recession mode, and while growth has moderated from earlier periods, firms continue to expand their workforces. However, Intuit’s QuickBooks Small Business Index showed a decline in jobs for very small businesses, reporting 7,000 fewer employees in September, with decreases across many sectors and regions.
Revenue trends for small businesses remain positive. Intuit data showed an inflation-adjusted average monthly revenue increase of 1.68% in September, with growth seen in nearly all industries and geographic regions. Payment processor Fiserv also reported improving sales among small enterprises, though it noted that consumer spending behavior remains selective, with lower customer foot traffic offset by increased per-transaction spending.
Broader economic indicators demonstrate continued expansion. The Institute for Supply Management’s Manufacturing Purchasing Manager’s Index marked its ninth straight month of growth, affirming sustained expansion in both manufacturing and service sectors. Recent revisions to first and second-quarter GDP growth rates raised annualized figures to 2.5% and 2.2%, respectively, signaling a stronger economy than some forecasts have suggested.
Regionally, Philadelphia faces unique challenges despite generally positive sentiment. A survey from WSFS Bank found that 92% of local business owners believed their companies are meeting or exceeding expectations, and 66% predicted growth over the next year. Nonetheless, the city exhibits relatively low rates of new business formation, hindered by factors such as access to capital, regulatory burdens, taxes, and scaling difficulties. This contrasts with national trends showing significant growth in Black-, Hispanic-, and female-owned businesses over the past decade.
As the nation approaches the midterms, the resilience of the economy and overall optimism among small business owners may prove beneficial for Republicans. However, whether this sentiment can offset President Trump’s low approval ratings remains uncertain.