Only 16% of US small businesses said they plan to invest in capital spending (CapEx) in the next 6 months — this is the lowest since November 2009, as posted by The Kobeissi Letter on X. This number has fallen by 12 percentage points since November 2024, showing a sharp drop in confidence. Earlier, before big crises like 2008 financial crash and 2020 pandemic, this number used to be around 30–35%, much higher than now.
Small business balance sheets (financial health) are still stable overall, meaning they are not in deep financial trouble yet. Credit card usage by small businesses is only slightly above 2019 levels, so there is no major credit stress right now. Because of this stability, businesses are choosing to save cash instead of expanding. The number of owners planning future investments has again hit lowest levels since 2009, confirming slowdown fears.
Payroll growth has turned negative for 3 straight months, meaning businesses are hiring less. This shows owners are cutting back on staff due to cost worries. But payments to hiring firms have started rising again, especially in construction and manufacturing. Hiring in these sectors is almost 40% higher than 2023 levels, showing uneven trends.
Even though finances are stable, businesses are choosing flexibility over growth right now. With low investment, weak spending growth, and hiring cuts, the small business sector is acting like the economy is in a crisis mode, as per Bank of America.
They are cutting spending due to high costs, taxes, inflation, and uncertainty about future policies.
Q2. Is the small business economy in trouble right now?
Not fully, but slow investment, weak hiring, and low growth show signs of a slowdown.
Costs and taxes squeeze businesses
The share of businesses that already invested in the last 6 months has also dropped by 9 points since January, and is still below normal levels. Main reasons for this slowdown are policy uncertainty and high energy costs, which are hurting small businesses. Business owners also say their biggest problems are high taxes, lack of good workers, and inflation. Overall, small businesses in the US are clearly under pressure and struggling right now.Profits stable, companies save cash
At the same time, profits are still slightly growing, up 0.3% year-on-year in Q1, which shows some stability, as per the Bank of America data. This profit growth is lower than early 2025 but better than late 2025, so the situation is mixed. As per the NFIB Surveys show some hope about future revenue, but this optimism fell in March after 4 months of improvement.Small business balance sheets (financial health) are still stable overall, meaning they are not in deep financial trouble yet. Credit card usage by small businesses is only slightly above 2019 levels, so there is no major credit stress right now. Because of this stability, businesses are choosing to save cash instead of expanding. The number of owners planning future investments has again hit lowest levels since 2009, confirming slowdown fears.
High fuel costs and weak hiring slow economy
More businesses are avoiding taking loans or external funding than ever before in 20 years, as per National Small Business Association via Bank of America. This shows that companies expect slower growth ahead. There is also a slowdown in new business formation, which signals a wider economic cooling, as per the US Census Bureau. Total small business payments rose only 1% year-on-year in March, showing very weak growth. Payments also fell compared to the previous month, meaning activity is slowing. Most spending categories slowed down, except debit card spending, which rose about 5% year-on-year.Fuel costs rise, hiring slows growth
Fuel costs jumped 23% year-on-year, increasing overall business expenses. Higher fuel prices are also raising costs for freight, farming supplies, and inventory. Sectors like agriculture and transport are getting hit the hardest. Small wholesalers are facing inventory cost increases of over 60%, along with tariff pressure, as noted by Bank of America.Payroll growth has turned negative for 3 straight months, meaning businesses are hiring less. This shows owners are cutting back on staff due to cost worries. But payments to hiring firms have started rising again, especially in construction and manufacturing. Hiring in these sectors is almost 40% higher than 2023 levels, showing uneven trends.
Even though finances are stable, businesses are choosing flexibility over growth right now. With low investment, weak spending growth, and hiring cuts, the small business sector is acting like the economy is in a crisis mode, as per Bank of America.
FAQs
Q1. Why are US small businesses reducing investment?They are cutting spending due to high costs, taxes, inflation, and uncertainty about future policies.
Q2. Is the small business economy in trouble right now?
Not fully, but slow investment, weak hiring, and low growth show signs of a slowdown.
