As pessimism eases, small businesses remain cautious [WSJ/Vistage June 2025]

With the 90-day pause on tariffs delaying impacts until next month, small business confidence rebounded in June with a nearly 8-point increase over May. While this is a notable month-over-month increase, it is still not a complete recovery from the fall in confidence in April due to the initial tariff announcements. The WSJ/Vistage Small Business CEO Confidence Index rose to 82.9 in June, driven by improvements in all forward-looking components.

While economic pessimism eases, negative impacts of tariffs persist

There is no doubt that economic pessimism is connected to tariff uncertainty. The sharp decline in small business confidence in April in response to the tariff announcements has rebounded slightly over the last 2 months. However, that uptick in confidence does not mean the impacts of tariffs have been mitigated. Nearly two-thirds of small business leaders report negative impacts of changing tariff and trade policies, whether direct (27%) or indirect (38%).

One specific impact small businesses have experienced is a change in customer behavior. Small business leaders report delayed orders (42%) and longer sales cycles (29%), while others find their customers more scrutinous in the buying process, with 30% evaluating other alternatives.

Inventory management impacts small businesses in industries like manufacturing, construction and wholesale trade. Small businesses need to evaluate how they carry inventory to minimize risk and costs.

Focus on inventory management

Of the 51% of small businesses that carry inventory, half report that inventory levels have not changed compared to prior years, indicating they are holding steady while evaluating the future. Additionally, the proportion of small businesses carrying higher and lower inventory levels sits at 19% and 18% respectively. Increasing inventory to avoid the pending costs of tariffs is a strategy some businesses are willing to take. As one respondent shares, “Our inventory is nearly 40% higher than a year ago due to a strategic inventory build to delay tariff impacts but also due to a decrease in sales that has led to a slower inventory turn.” This highlights that excess inventory is in part due to slower demand and longer sales cycles.

Similarly, tariffs on China will impact a subset of all small businesses, with just 25% reporting that they order goods or materials from China. Of those that rely on China for goods and materials, 42% are trying to accelerate shipments during this 90-day tariff pause. It is important to do a cost-benefit analysis to determine if the cost to accelerate shipments now is greater than the cost of tariffs imposed on goods in the future. In addition, increased inventory on the books can impact a business’s valuation, and that must be weighed into the decision as well.

Small businesses remain cautious about investments

While just over a third (34%) of small business leaders plan to increase fixed investments in the year ahead, 17% expect to decrease fixed investments. When it comes to capital expenditures, over a quarter of small business leaders (26%) report that they now plan to decrease capital expenditures compared to the plans at the beginning of the year. With the level of uncertainty and economic pessimism, many small businesses have put spending on hold.

As William Duff, founder and managing principal of William Duff Architects, Inc., in San Francisco, California, shares, “We have stopped most of our new spending initiatives until there is more certainty in the marketplace.”

Contrary to what feels safe, analysts from ITR Economics, who have spoken at Vistage Executive Summits in various cities across the U.S., recommend that small businesses invest in their business now. With growth, albeit slow, projected to return later in the year, the best ROI will occur when investments are made, implemented and refined now.

June highlights

The June WSJ/Vistage Small Business CEO Confidence Index was calculated from an online survey sent to CEOs and other key leaders who are active U.S. Vistage members. The survey, conducted between June 2 and 16, 2025, collected data from 755 respondents with annual revenues ranging from $1 million to $20 million.

• Current economy: Just over half (51%) of small businesses believe the U.S. economy is worse than a year ago, a 7-point improvement over last month. Just 17% believe the economy is better, a 3-point improvement from levels recorded in April and May.
• Future economy: Pessimism eased among small businesses, with 36% expecting the U.S. economy to worsen in the next 12 months, an 8-point decrease from May.
• Revenue projections: 55% of small businesses expect increased revenues over the year ahead, an 8-point improvement from last month. Conversely, pessimism about revenue projections decreased as the proportion of small businesses that expect revenue to decrease declined 7 points, reaching 15%.
• Profitability projections: Over 4 in 10 (43%) of small businesses expect profitability to improve in the next year, an incremental improvement from last month, while 23% expect declines in profitability, an 8-point improvement.
• Fixed investment plans: Small businesses remain conservative with spending, with just over a third (34%) of small businesses expecting to increase fixed investments. Additionally, 17% plan to decrease fixed investments.
• Workforce expansion plans: While 11% of small businesses voiced expectations that their workforce would decrease, 46% plan to increase the size of their workforce in the next 12 months.

To explore the full June 2025 WSJ/Vistage Small Business data set, visit our data center or download the infographic.

The July 2025 WSJ/Vistage Small Business CEO Confidence Index will be calculated from small business respondents to the July WSJ/Vistage Small Business survey, which will take place July 7-14, 2025.

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