Bank of America's Sharon Miller on Small Business Optimism and Economic Outlook for 2026

Small Business Economic Outlook

• 📈 74% of small and midsize business owners anticipate an increase in their revenues.
• 🚀 Nearly 60% of businesses plan to expand their operations.
• 💡 Business owners are approaching 2026 with cautious optimism, expecting revenue growth and expansion.

Supply Chain and Cost Pressures

• ⚠️ Supply chain bottlenecks are a significant concern for half of surveyed business owners.
• 🚚 75% of respondents report their businesses are currently impacted by supply chain issues.
• 💰 More than half of affected businesses are responding by raising prices.
• 🗣️ Business owners are actively managing costs, with some passing inflation and tariff impacts to consumers while others absorb them.

Drivers of Optimism

• ⚖️ Perceived stability in the economy is a key driver, with inflation cooling and interest rates decreasing.
• 🌐 While supply chain issues persist, they are reportedly stabilizing.
• 🛠️ Businesses are focusing on controlling what they can, including new supply chain strategies and sourcing diversification.

Impact of Tariffs and Legal Challenges

• ⚖️ The potential Supreme Court ruling on the legality of widespread tariffs, initiated for national security reasons, introduces uncertainty.
• 🧐 The outcome of this ruling could significantly impact businesses, particularly those importing goods.

AI and Labor Market Dynamics

• 🤖 77% of businesses are exploring or implementing Artificial Intelligence (AI).
• 💡 AI is being used for marketing, sourcing new clients, inventory management, and operational efficiencies.
• 🧑‍💼 In response to a tight labor market, businesses are seeing productivity and efficiency gains through AI, helping to offset labor shortages.
• ⏰ Business owners are also working more hours themselves or expanding employee responsibilities.