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Small Business Checkpoint: Adding up expenses
Small businesses enter 2026 cautiously optimistic as profitability growth meets rising costs and hiring hesitation.
February 2026
Key takeaways
- Small business owners reported improved business health and higher expected sales heading into 2026, yet concerns about inflation, unemployment, tariffs, and interest rates remain elevated. Sensitivity to these factors varies sharply by region, underscoring that optimism feels different across the country.
- Small business profitability is under pressure as rising costs outpace solid consumer spending, according to Bank of America internal data. Until cost pressures — particularly tariffs and inflationary inputs — ease meaningfully, firms may remain hesitant to hire, invest, or expand, even in the face of reasonably supportive consumer fundamentals.
- Hiring momentum has cooled as firms adopt a "low‑hire, low‑fire" posture. Although layoffs were down at the smallest firms (<50 employees), openings were down even further. Still, a small uptick in small business payments to hiring firms growth in January might signal a rebound that's shaping the early‑2026 labor landscape.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
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