Small business owners optimistic for 2026 despite lingering cost pressures

Op-ed views and opinions expressed are solely those of the author.

In a positive shift for the U.S. economy, small business owners are heading into 2026 with heightened optimism, bolstered by improved profitability and plans for increased hiring, according to the latest Bank of America Small Business Checkpoint report. The report, which analyzes trends from late 2025, highlights a decline in economic uncertainty and a rebound in key performance indicators, painting a picture of resilience among America’s entrepreneurs.

The National Federation of Independent Business (NFIB) data cited in the report shows that small business optimism improved markedly in the closing months of 2025, even as uncertainty remained elevated compared to historical norms. Factors such as fluctuating consumer spending and policy changes, including tariffs, had weighed on sentiment over the past 18 months, but recent trends suggest a turning point. This renewed confidence is expected to carry forward into 2026, with owners expressing greater faith in economic stability.

Profitability also saw an uptick throughout 2025, with Bank of America’s analysis of small business account inflows and outflows indicating a slight rise above 2024 levels. However, the momentum slowed toward year-end, as year-over-year growth dipped into negative territory for the second straight month in December. Despite this late-year softening, overall profitability remains higher than the previous year, providing a solid foundation for growth in the new year.

Hiring activity emerged as another bright spot, accelerating at the end of 2025. Payments to hiring firms surged 7% above the 2024 average, driven primarily by small retailers, though the services sector lagged behind. This increase signals that small businesses are gearing up for expansion in 2026, potentially adding jobs and stimulating local economies.

The report raises questions about whether this hiring surge will persist, but early indicators point to a proactive approach among owners. While the outlook is largely upbeat, cost pressures continue to pose challenges, though they appear less severe than initially forecasted.

Mounting expenses contributed to the dip in profitability late in 2025, yet the report notes that these pressures have not escalated as dramatically as some predictions suggested. Small business owners are navigating these hurdles with caution, balancing investments in growth against ongoing economic headwinds.

Overall, the Bank of America Small Business Checkpoint underscores a theme of cautious optimism for 2026. As small businesses—considered the backbone of the U.S. economy—adapt to evolving conditions, their improved sentiment could signal broader recovery trends. Economists will be watching closely to see if this momentum translates into sustained growth throughout the year.

“Did small businesses shed or hire workers by the end of 2025? Are they cautious or cautiously optimistic? Depends on who you believe. Bank of America says one thing. ADP says another. Regardless, the most powerful way to help small businesses and the economy (they are the same; 99.9% of all businesses are small businesses) remains crushed. Almost all federal small business contracts go to big businesses (despite SBA pronouncements), and those big businesses don’t create jobs to do that work. They’re already big. But legitimate small businesses would create around two million extra new jobs each year if only small businesses got federal small business contracts,” said Bruce de Torres, Director of Communications for the American Small Business League.

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