U.S. Business Confidence Hits a Pandemic-Era Low: What That Means Now

Staff Writer
Jun 10
3 min read

Business confidence in the U.S. has taken a sharp dive, reflecting a growing unease among small and mid-sized business owners. According to ABL Advisor, citing the latest Principal Financial Well-Being Index, the overall confidence level has dropped to 6.02, the lowest it’s been since November 2020. While economic headlines often paint a mixed picture, this decline cuts through the noise, revealing real anxiety about inflation, recession risk, and the ability to secure financing in a volatile environment.

Key Findings

The overall confidence index has plummeted from 7.8 in November 2024 to 6.02 in June 2025
Small and mid-sized businesses (SMBs) saw their sub-index drop by 14%, from 7.38 to 5.69, the steepest dive yet.
Only 16% of employers believe the national economy is growing, a sharp decline from last year.
Meanwhile, 56% report their own businesses are growing, and 29% see local economic expansion, although both metrics are trending downward.
SMB concerns are centered on inflation (55%), economic stability (55%), and recession fears (49%).

Broader Landscape: More Than Just a Numbers Drop

This trend is not isolated. The NFIB Optimism Index also slid further in April, landing at 95.8, marking its fourth consecutive monthly decline below the 51-year average. Job openings levels fell to their lowest in over four years, signaling a cooling labor market.

Still, there were early signs of stabilization in May; the NFIB index ticked up to 98.8, and small-business sentiment improved slightly amid softening tariffs and renewed trade optimism.

What’s Driving the Decline?

Macroeconomic Jitters: Persistent inflation, volatile trade dynamics, and mixed policy signals are keeping business leaders on edge.
Echoes from 2020: The shake-up in confidence mirrors patterns seen during the early COVID-19 wave, except this time, layoffs are rare. Employers are choosing to hold onto staff, cutting discretionary spending instead.
Policy Ambiguity: With uncertainty over tariffs, the economic stability index, and the timing of potential policy interventions, businesses are in a "wait-and-see" mode.

What It Means for SMB Finance and Funders

Funding strategies should reflect caution: expect longer sales cycles, reduced capital expenditures, and elevated risk sensitivity.
Lenders will likely tighten underwriting standards, prioritizing cash flow and existing borrower stability.
Fee structures may come under pressure, as borrowers resist higher costs in an uncertain environment.

Looking Ahead: Signals and Strategies

Trade Prospects: Continued de-escalation (e.g., lower tariffs with China) could boost sentiment, as seen in May’s NFIB uptick.
Policy Clarity: Clear direction on tax reform, trade, and inflation relief could restore confidence, but delays may prolong the stagnation.
Tech and Automation: SMBs focused on efficiency, like automation and AI, may outperform peers. According to other surveys, 91% of small businesses believe in investing in tech to thrive.

Future Expectations

Stabilization followed by regional divergence: Some areas might bounce back faster due to local economic strength, while others lag.
Leaner SMB operations: Expect business owners to maintain staffing levels but tighten budgets, focusing on productivity.
Renewed focus on resilience: Financial products that support working capital flexibility, cost management, and risk mitigation will be in demand.

Final Take

This isn’t just another confidence dip, it’s a caution flag. Small and mid-sized businesses are signaling caution, not collapse. For funders and fintech platforms, the path forward lies in being agile, empathetic, and prepared. Tailored solutions that address liquidity, flexibility, and scale can make all the difference in building resilience on Main Street.