Small Business Sentiment Rises in Q3 Despite Economic Headwinds

The Q3 2026 Small Business Index reached 70.5, a four-point increase from the previous quarter, with 71% of small business owners reporting their ventures are in good health and 72% comfortable with cash flow. Inflation remains the leading challenge for small businesses, cited by 54% of respondents for the third consecutive quarter, yet 62% anticipate higher revenues and more than a third plan to expand investment and hiring. The optimism about individual business performance contrasts sharply with pessimism about the broader economy, as only 27% believe the national economy is healthy.

The survey reveals a notable divergence in how small business owners perceive their own operations versus the broader economic landscape. While roughly seven in ten report their ventures are performing well, fewer than one-third believe the national economy is functioning healthily. This gap suggests owners are managing their immediate business challenges effectively even amid wider economic uncertainty.

Employee benefits represent a significant investment area for small firms. Despite rising costs and budget constraints, most small businesses have expanded offerings in health insurance, paid time off, and retirement programs compared to the previous year. Owners recognize these benefits as essential tools for workforce retention and attraction, though implementation remains challenging for cost-conscious operations.