Small businesses overwhelmingly expect a recession

• The vast majority of small-business owners are expecting a recession, a survey finds.
• Some 80% of small business owners say the current economy is a major or existential threat to their existence.
• Despite the fears of a recession, recent economic data has shown growth in most states.

Economic fears are running high among small businesses, which employ tens of millions of people and support local economies.

Some 79% of small business owners are concerned about a U.S. recession in the next 12 months and 80% say the current economy is presenting an existential or major threat to their existence, according to a survey by Small Business For America's Future, which polled 862 small-business owners from April 18 to May 2.

The top concerns with the current economy are "inability to grow or expand business," with 48% of respondents, followed by "supply chain disruptions and increased supplier costs" (43%) and "rising costs of imported materials or products due to tariffs" (42%).

Small businesses are often praised as the backbone of the American economy: There were nearly 33.2 million small businesses employing nearly 62 million people in 2023, according to the Small Business Administration. 

The survey adds to growing evidence of fears among small businesses, following economic uncertainty, political turmoil and the trade war.

'Hasn't happened yet'

Still, Federal Reserve data has shown growth in 43 states and decreases in only three as of April, instead of the negative growth in at least half that would be considered an indicator of recession-like conditions, said Jack Kleinhenz, chief economist of industry group National Retail Federation, in a statement.

“The possibility of a U.S. recession in the near future has increased due to rising trade tensions and other economic factors, but it hasn’t happened yet,” Kleinhenz said. “With so much uncertainty surrounding the economy in the past few months, I’m not sure anyone can predict the storm path of tariffs and their likely impact."

Consumers have also stocked up on purchases ahead of likely price increases from tariffs: Total retail sales, excluding automobiles and gasoline, were up 0.72% seasonally adjusted month over month and up 6.76% unadjusted year over year in April, according to the National Retail Federation.

And some American businesses are seeing positives from the tariffs.

Electric Mirror, a manufacturer of lighted mirrors, has decided to build a factory in the U.S. instead of moving manufacturing overseas because of tariffs, the company's CEO Jim Mischel wrote in an op-ed in The Washington Times.

“These policies allow Electric Mirror to continue manufacturing in America, where we began and want to stay,” he wrote.