Ahead of Rate Cut, Small Business Confidence Hits 8-Month High [WSJ/Vistage Sept 2025]

Mere speculation about interest rate cuts led to a boost in small business confidence in September. The WSJ/Vistage Small Business CEO Confidence Index rose to 88.1, the highest level in 8 months. Although the Index remains below the 12-month average, as each month passes, the post-election optimism diminishes from the average, and soon this figure will provide a more accurate view of small business sentiment. Indeed, the rumors of the first interest rate cut in 2025 impacted expectations for the next 12 months, and the actual cuts that were implemented following the survey should further bolster confidence.

As noted last month, more permanent tax rates provide small business leaders with greater certainty for the future. The recently passed One Big Beautiful Bill Act (OBBBA) will result in significant cost savings that small business leaders can leverage to invest in their businesses.

However, the drivers behind the rise in small business confidence in September were not related to improving economic sentiment; in fact, economic sentiment mainly remained unchanged. Instead, small businesses are optimistic about their own prospects and have positive plans for growth. A greater proportion of small business leaders expect increased revenues and profits in the coming 12 months.

And contrary to data showing that job growth is slowing, an increasing number of small businesses plan to add personnel over the next 12 months. The proportion of small business leaders who plan to increase their total number of employees surpassed 50% for the first time since January, while those planning to decrease have been shrinking since a peak in April.

Protecting Profitability with Price Increases

The most notable driver of the Index’s increase this month is the rise in the proportion of small business leaders who anticipate increased profitability over the next 12 months, which grew 5 points to reach 48%. This is good news considering that 45% reported that tariffs have impacted their profitability.

A common strategy to protect margins has been implementing price increases, and nearly half of small business leaders plan to raise prices in the next 3 months, which may not be the first increase. In fact, 37% of small businesses report they have raised prices as a result of tariffs.

As Jean Anne Booth, CEO of UnaliWear in Austin, Texas, explained, “We absorbed input materials tariff costs last time; we can’t this time. We have a variable tariff adder when you purchase, so the cost goes directly to the consumer.”

With 55% of small business leaders reporting that they have experienced increased costs as a result of tariffs, price adjustments are just part of how to mitigate the effect.

As Erica Misuraca, CEO of ESB Design+Build in Marana, Arizona, shared, “Tariffs have been an issue since January. In some cases where we couldn’t hedge for anticipated cost increases, we have had to make the hard decision to either absorb the added cost or charge the customer for the increase. For new projects, we try to price them in. This raises revenue but may still impact profitability, because in delivering turnkey commercial buildings with unbeatable speed, part of our value proposition is low cost, and we still have our own end market to compete in.”

The increased costs caused by tariffs have had some impact on personnel in the past, with 15% of small businesses reporting that they decreased their workforce. Recently, the percentage of small companies intending to downsize their workforce has gradually reduced. Those who have already reduced their workforce may have a clearer view of the future and are hiring accordingly.

Workforce Growth Ahead for Small Businesses

Falling job numbers have been making headlines. And with increased costs from tariffs layered on top of rising wages, holding off on hiring can be a short-term cost-saving measure. However, with prospects for revenue and profitability improving over the next 12 months, small businesses are also anticipating increased human capital. The proportion of small business leaders planning to expand their workforce in the next 12 months increased by 7 points from last month to reach 51%, just 2 points lower than the same time last year.

While immigration does not present workforce impacts for approximately 6 in 10 small businesses, 30% report negative impacts. Specific industries are more susceptible to adverse effects and have experienced disruptions on different levels, as detailed below. For those in industries or geographies hit the hardest, it will be crucial to diversify recruitment pipelines to avoid over-reliance on vulnerable labor segments.

Implications for Leaders

While data shows one aspect of the picture, analysis of open-ended responses helps fill in some of the context. The biggest challenges leaders report focus less on demand decline, but rather on the difficulty of scaling, demonstrating a preparation for growth, not contraction.

While tariffs are clearly constraining current operations, small business leaders can adapt to and outgrow these pressures in the following year. CEOs must continue to strike a balance between short-term and long-term goals as we enter the final quarter of the calendar year. Strategic plans for 2026 should incorporate modest growth and be proactive, while also leaving room for flexibility and responsiveness. Key takeaways include:

• Take strategic action despite uncertainty.
• Rely on credible economic data and sources for decisions.
• Protect margins and avoid unprofitable growth.
• Approach headcount reductions with caution.
• Anticipate and plan for persistent inflation.

September Highlights

The September 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 September 2 and 16, 2025, collected data from 658 respondents with annual revenues ranging from $1 million to $20 million.

• Current Economy: Just over 1 in 5 small businesses (21%) say the U.S. economy is in better shape than a year ago, while 43% believe it has worsened. That’s a slight dip in optimism from August, though better than early 2025, when fewer than 1 in 5 saw signs of improvement.
• Future Economy: Looking ahead, business leaders remain divided, with 32% expecting improvement, 31% anticipating little change, and 34% expecting worsening conditions. A fairly steady outlook, compared to recent months, suggests that cautious optimism is holding its ground.
• Revenue Projections: Optimism continues to climb, with 60% of small businesses now anticipating revenue growth in the year ahead, the highest reading since January. Meanwhile, just 11% anticipate declines, extending a six-month decline from 27% in April.
• Profitability Projections: Nearly half (48%) of small business leaders expect more substantial profits, up 5 points from last month, and nearly back to levels seen in early 2025. Only 19% expect a decline, down from 32% in April.
• Fixed Investment Plans: One-third (33%) of businesses plan to increase capital spending in the next year, slightly below August’s level, but still within the mid-30% range held throughout 2025. At the same time, 15% expect to scale back, while half plan to maintain their current level of spending.
• Workforce Expansion Plans: Hiring expectations rose sharply in September, with 51% of business leaders indicating that they plan to add staff, a 7-point increase from last month and the strongest reading since Q1. Only 10% expect reductions, a figure that has remained relatively stable throughout the year.

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

The October 2025 WSJ/Vistage Small Business CEO Confidence Index will be calculated based on responses to the WSJ/Vistage Small Business CEO survey, conducted from October 6 to 13, 2025.

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