Fifty-one percent of small business owners reported making capital outlays in the last six months, unchanged from March. Actual capital expenditure levels have declined by 9 points since the beginning of this year and remain below the historical average. Of those making expenditures, 35% reported spending on new equipment (down 1 point), 23% acquired vehicles (up 1 point), and 15% improved or expanded facilities (up 1 point). Eleven percent spent money on new fixtures and furniture (up 2 points), and 6% acquired new buildings or land for expansion (up 1 point). Seventeen percent (seasonally adjusted) of small business owners plan to make capital outlays in the next six months, up 1 point from March’s lowest level since November 2009. Small businesses aren’t just sitting on the sidelines—it appears many of them have left the playing field altogether.

Both actual and expected sales questions showed weakening in sales. A seasonally adjusted net -8% of all owners reported higher nominal sales in the past three months, down 3 points from March. As actual sales volume fell in April, so did sales expectations. The net percent of owners expecting higher real sales volumes over the next quarter fell 4 points from March to a net 3% (seasonally adjusted), the lowest reading in 12 months. The net percent of owners reporting inventory gains rose 1 point to a net -5% (seasonally adjusted). Not seasonally adjusted, 12% reported increases in stocks (up 5 points), and 16% reported reductions (unchanged). A net -2% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in April, up 3 points from March. A net -2% (seasonally adjusted) of owners plan inventory investment in the coming months, up 3 points from March. In April, 64% of small business owners reported that supply chain disruptions affected their business to some extent, up 2 points from March. Five percent reported a significant impact (up 2 points), 19% reported a moderate impact (up 2 points), 40% reported a mild impact (down 2 points), and 35% reported no impact (down 1 point). These disruptions can have significant impacts on inventory stocks and plans.

The frequency of reports of positive profit trends rose 6 points from March to a net -19% (seasonally adjusted). Among owners reporting lower profits, 33% blamed weaker sales, 15% cited the usual seasonal change, and 13% cited rising material costs. Nine percent cited price change from their product(s) or service(s), 9% cited labor costs, and 6% reported other reasons. Among owners reporting higher profits, 54% cited sales volume, 14% cited usual seasonal change, and 11% cited price change from their product(s) or service(s).

In April, the net percent of owners expecting easier credit conditions rose 1 point to a net -4% (seasonally adjusted). A net 3% reported their last loan was harder to get than in previous attempts, down 2 points from March. In April, a net 2% of owners reported paying a higher interest rate on their most recent loan, up 5 points from March. The average interest rate paid on short maturity loans was 8.3% in April, up 0.4 points from March. Twenty-two percent of all owners reported borrowing regularly, down 2 points from March and the lowest level since November 2021. The low levels of borrowing are likely tied to the low levels of capital outlays discussed earlier; when owners start investing in their business again, borrowing will pick up.

In April, reports of both actual and planned price increases rose. The net percent of owners raising average selling prices rose 5 points from March to a net 30% (seasonally adjusted), well above its historical average of net 13%. Unadjusted, 41% reported higher average prices (up 3 points), and 8% reported lower average selling prices (down 3 points). Looking forward to the next three months, a net 27% (seasonally adjusted) plan to increase prices, up 3 points from March. Sixteen percent of owners reported that inflation was their single most important business problem, up 2 points from March. Inflation ranked third among the top issues.

When asked to evaluate the overall health of their business, 12% rated it as excellent (down 1 point), 55% as good (up 4 points), 29% as fair (down 1 point), and 4% as poor (unchanged). The net percent of owners expecting better business conditions fell 7 points from March to a net 4% (seasonally adjusted). This was the fourth consecutive monthly decline in expected business conditions and the lowest level since October 2024. In April, 7% (seasonally adjusted) reported that it is a good time to expand their business, down 4 points from March and the lowest level since October 2024.

In April, 18% of small business owners cited labor quality as their single most important problem, up 3 points from March and the top problem. Nine percent of business owners reported labor costs as their single most important problem, down 1 point from March. Outside of labor-related issues, 17% of small business owners reported taxes as their single most important problem, down 2 points from March and ranking second. Sixteen percent of owners reported that inflation was their single most important business problem, up 2 points from March. Inflation ranked third among the top issues. The percent of small business owners reporting poor sales as their top business problem remained at 10%. In April, 8% reported the cost or availability of insurance as their single most important problem, down 1 point from March. The percent of small business owners reporting government regulations and red tape as their single most important problem rose 1 point from March to 8%. Seven percent reported competition from large businesses as their single most important problem, unchanged from March. Three percent reported that financing and interest rates were their top business problem in April, unchanged from March.

Economic growth picked up in the first quarter, posting 2% growth after less than 1% in the fourth quarter of 2025. The driver was capital spending, as AI investments surged. Government spending added a little oomph; consumers stayed in the weeds. Job creation was a bit better, but the unemployment rate stayed the same. Powell conducted his last meeting as Fed chair. President Trump wants the new chair to cut interest rates, but the rest of the Federal Open Market Committee is unlikely to comply. Indeed, some on the Fed Board favor a rate increase to prevent the AI spending and higher energy prices from pushing inflation higher. This is a tough balancing act.

In April, when more small business owners reported paying higher interest rates on their loans, the market raised those rates, not the Fed. The frequency of price increases for goods and services also rose, adding more to inflationary pressures. The percent making capital outlays is down nine percentage points so far this year; there doesn’t appear to be an AI investment surge on Main Street. With the April 15 Tax Day behind us, the benefits of the OBBB should start to feed into the private sector, and perhaps capital spending will respond later in the year as owners sort out the actual changes in the bill. Corporate profits are booming and the stock markets are hitting records, so hopefully Main Street will follow. But consumers have been “quiet”; sales are lagging, and hiring is weak. Consumer and Small Business Optimism are weak. Many uncertainties remain unresolved, but this process will likely get underway over the next few months.

“In our rural northern California area, qualified/skilled/knowledgeable help is nonexistent. Unskilled is nonexistent.” – Retail, CA

“It’s impossible to find good mechanics. We did not have this problem twenty years ago. Also, our competitors are having the same problem of finding people with automotive skills.” – Services, CA

“I’m on a livestock farm, and it is impossible to find help. Any warm body expects $20/hour for what should be a minimum wage job.” – Agriculture, TN

“The economy isn’t nearly as bad for my business outlook as the upcoming workforce is. Skilled trades are going to be tough in rural areas very soon!” – Services, MI

“It is difficult to find qualified auto technicians that want to progress in this field.” – Services, NY

“Finding both skilled and unskilled labor is increasingly difficult. There seems to be a lack of good work ethic and pride in one’s labor.” – Retail, SD

“My main concern is the lack of quality employees available in our area. Many people don’t want to work a full 40 hours a week, are not as skilled as they say they are, and have no idea how to budget money and run out before payday. We need to train the next generation better.” – Construction, FL

“We need employees. There are no qualified mechanics that are applying for our job openings. That included needing a repair expert for on the farm repairs.” – Services, VT

“Business is good but well under what we projected. Still hard to find good workers in our industry. Not enough skilled labor.” – Manufacturing, OH

“We have the work/jobs, but no skilled workers available. Ran ads for months and paid too much with no skilled people. The unemployment office is not helping. I could grow my business by 30% if skilled workers were available. We need high school trade classes back at the high school level.” – Services, TN

“The only issue I feel we have is the cost of our products has gone up so much that clients don’t want to purchase product for use at home because of [the] cost. Clients are going longer between appointments because of [the] cost. We don’t want to raise [prices] but will need to do so if [the] cost of supplies doesn’t change.” – Services (salon), OH

“The overall financial stability with the American farmers is getting significantly weaker. The costs of inputs (fertilizer, chemicals, fuel, and seed) have increased dramatically and the price we sell our grain has not kept up at all.” – Agriculture, OH

“Fertilizer and diesel fuel for the farmer are so high priced.” – Agriculture, PA

“As a business we still feel the effects of the high inflation we all incurred in 2020-2024. People have less disposable income to spend because inflationary pressures that have increased the cost of nearly everything people purchase with their money…” – Financial, MT

“Our business is greatly influenced by overall cost of living as well as corporate owned business pressures/competition.” – Agriculture, OH

“If oil stays high, we will all be hurting again.” – Insurance, OH

“Business has seen a severe impact from the Iran war. Big jump in fuel prices. Also, the cost of doing business is always rising but our margins stay the same more or less.” – Retail, CO

“Fuel prices are affecting our business significantly. Cost of equipment repairs are also increasing significantly.” – Construction, NY

“Our supplies are a lot of petroleum-based products. I expect increases due to inflated oil prices. Also due to gas prices, shipping will increase.” – Agriculture, IN

“War in the Middle East has a direct impact on our business- fuel costs, metal pricing, asphalt shingle pricing… Every business passes it on to the consumer in the form of fuel surcharges, shipping rate

increases, or as a cost of doing business. Employees want more to cover the cost of getting to work.” – Construction, PA

“Fuel prices are hitting us hard. We cannot pass on the cost of price increases to the consumer fast enough.” – Retail, SC

“My business is based on the housing market. It has to change for the better if I’m going to make it! This is my 40th year in business. This is the worst it has been!” – Professional/ business services, CO

“Our business is typically a good indicator of the economy. We are doing a lot of lending.” – Services (pawn shop), TX

“Need to keep fuel, taxes, and insurance down. I don’t know how anyone can keep going with these amounts increasing daily.” – Agriculture, OR

“I think it is getting harder and harder to own and operate a small business. Cost of insurance, both general/auto, and medical. The cost of hiring to keep employees, and the amount of taxes we pay. The cost of fuel! Instability makes it difficult to price services, not to mention the more we pay the more we have to

charge just to keep afloat. It is getting harder to find clients that can afford to have work done.” – Construction, NV

“I believe people are nervous to spend money because of the economy and are unsure of what will happen in the upcoming months. Summer is typically very busy for us, but who knows?” – Services, IL

“Taxes, insurance costs, and hideous fuel inflation along with sizable debt is threatening our existence every single day!” – Transportation, NC

“We feel that the economic climate has changed and companies are holding off on expenditures which affects our business. While the health of some companies are good, others are hurting. It seems our profits keep shrinking due to overhead costs like utilizes, insurance, etc.”- Professional/ business services, IL

“We are an independent insurance agency. We have been affected greatly by the softening insurance market. We’re especially getting beat up by the big captive and big direct carriers who have unlimited

advertising funds and encourage shop, shop, shop! and find the lowest premium. It’s getting harder to sell value if it costs $50 more than Geico. Very discouraging.” – Insurance, FL

“As a small business, we no longer can compete with big corporations on sales.” – Retail, FL

“For a single small business, competing in the market is getting more and more difficult. Prior to 2020 we were able to offer competitive wages and value in our pricing.” – Services, OK

“We need prime interest rates to drop to see business get back to normal.” – Construction, TX

“The biggest challenge as a small business is cash flow and access to funding. Taxes and regulations smother small businesses and make it almost impossible to get ahead of the game. This is not only because of the endless high taxes but the amount of time and money it takes to ensure compliance. On top of these costs, there are no institutions willing to lend funds at a reasonable rate. We spend way too much time chasing money.” – Other, UT

“I am the third generation to operate at my current location. The local economy will fluctuate, and our business will follow that trend. Our local economy is commodity-based. The more [people] that are employed locally, the more traffic, and that translates to customers. This business began in 1950 by [my] grandfather’s investment and in September, 76 years of family operation is still active and it was that way then. Policies change, trends change, desires change, but determination and dedication are still alive and well.” – Retail, KY

“I added a full-time producer a few years ago and it is now really paying off as we have not only increased our capacity, but also our quality. That means we have increased our sales exponentially.” – Professional/business services, NE