Small Business Optimism Sinks to Lowest in Years; Investing, Hiring Grow [WSJ/Vistage September 2026]

September offered plenty of challenges for small business leaders. The Federal Reserve raised interest rates, new rounds of U.S.-Canada tariffs took effect, and renewed conflict in the Middle East pushed oil prices higher once again. The WSJ/Vistage Small Business CEO Confidence Index fell to 85.0 in September, down 1.3 points from August’s 86.3 and 4.7 points below last September. This decline also pushes the Index below the 12-month average of 89.2.

However, this decline in overall confidence hasn’t reached leaders’ projections or plans for their business for the next 12 months. While economic pessimism grew, so did hiring and investment plans, revealing a split between sentiment and behavior. And these investments are needed to meet demand, as over 6 in 10 are projecting increased revenues over the next 12 months despite economic uncertainty. While some of the expected revenue increases may come from price increases, certain industries are still seeing healthy demand.

Shifting views on the economy drove this month’s decline as small business optimism reached its lowest levels in years.

• Just 12% report that the economy is better than a year ago, the smallest proportion in over two years. Half of small business leaders report the economy is worse than a year ago, a 10-point increase from last month.
• Looking ahead, just 18% report that the economy will improve in the next 12 months, the lowest proportion since November of 2023. And 36% report expectations for the economy to worsen in that same period.

Within their businesses, increasing numbers of leaders are making investments in the year ahead — including fixed investments and workforce expansion.

Are Rising Costs Affecting Small Business Investments?

Not yet. The brightest point in this month’s data is the proportion of small business leaders who plan to increase their workforce, which climbed 6 points from last month to reach 51%. Yet, one of the top challenges reported by small business leaders is finding and retaining qualified talent. As Bob MacDonald, President of AVID Restoration and Plumbing in Tampa, Florida, says, “We are opening a new HVAC division. Getting the right people is probably our biggest challenge.”

Despite the interest rate increase voted on by the Fed, small businesses are not planning to pull back on investing in their future. In fact, those planning to increase fixed investments in the year ahead rose to 35%, up 3 points from last month and 8 points from a year ago. One of the top challenges being reported is margin pressures; leaders must ensure any investments have a strong return. Robb Fahrion, CEO of Flying V Group in Newport Beach, California, explained their approach to balancing investments with ROI. “We are continuing to push the need for compounding returns on any business investments,” he says.

How is Economic Sentiment Impacting Demand?

Among their top challenges, small business leaders cite the impact of economic uncertainty on demand as a leading concern. However, 61% report expectations for increased revenues in the year ahead, a percentage that has remained relatively unchanged for the past 4 months.

The K-shaped economy, in which certain segments are thriving, is reflected in this data. As one member shared, “Vendors have been unable to keep up with our current growing sales momentum,” says Mark Pavlansky, President/CEO of Hibco Plastics, Inc., in Yadkinville, North Carolina. “I would have had larger top and bottom lines during the last three months if my vendors could have kept up with demand.”

What Are Small Businesses Doing to Mitigate Tariff Impacts?

Tariffs are something businesses have learned to manage. When asked about the impacts of the recent U.S.-Canada tariffs specifically, 44% of small business leaders reported negative impacts, whether direct (19%) or indirect (25%), while 17% were uncertain. As tariffs impact certain industries more than others, it is no surprise that 38% reported no impacts.

For those impacted by the U.S.-Canada tariffs, they are responding in three ways:

1. Pass costs through pricing. The largest cluster — many say they have to pass tariff-driven cost increases through to customers.
2. Wait and see, absorbing costs. The second-largest group is opting to absorb costs in the short term, pending clarity on the extent of the impacts.
3. Shift sourcing away from tariffs. A smaller cluster is shifting to U.S. suppliers, buying less from Canada, locking in steel early, or moving production to serve markets directly.

With demand remaining steady, and growth forecasts for the year ahead, small businesses appear more willing to keep investing in their business. How they will manage declining optimism, shifting demand and margin pressures will be critical as wages and inflation are projected to continue. Avoiding profitless prosperity should be at the top of any leaders’ list for the foreseeable future.

September WSJ/Vistage CEO Confidence Index Highlights

The September 2026 WSJ/Vistage Small Business CEO Confidence Index was calculated from responses to an online survey sent to CEOs and other key leaders who are active U.S. Vistage members. The survey, conducted between September 8 and 22, 2026, captured data from 562 respondents with annual revenues ranging from $1 million to $20 million. The Index is calculated based on favorable minus unfavorable responses from this set of standard questions, plus 100, anchored to June 2012 = 100.

To explore the full September 2026 WSJ/Vistage Small Business data set, visit our data center, or download the infographic.

The October 2026 WSJ/Vistage Small Business CEO Confidence Index will be calculated from responses to a survey capturing sentiment of active members of Vistage CE and SB groups reporting $1-20 million in annual revenue between October 1 and 9.

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