Business owners, households and markets split on path of US economy

Hiring plans are holding up, stock indexes are breaking records and survey respondents are more likely to predict growth than recession. But inflation anxiety and job-market worries continue to cloud the outlook for the US economy, leaving a landscape defined less by euphoria than by cautious, uneven optimism.

In recent days, three snapshots of sentiment have landed in quick succession: a Nationwide survey of business owners, a Gallup poll of the general public, and a market milestone as the Dow Jones Industrial Average crossed 50,000 for the first time. Together they point to an economy that many Americans still describe as strained, even as they behave in ways that assume continued expansion.

Business owners wary on economy, committed to workers 

Nationwide’s latest survey of 800 small and mid-sized business owners underscores that disconnect. Nearly half of respondents, 49 percent, rated the US economy as “poor” or “fair,” citing inflation, elevated interest rates and the prospect of a downturn as their primary concerns. Still, those same owners are hiring, lifting pay and preserving benefits, often by absorbing the cost themselves.  

Hiring data in the survey suggest that labor demand remains resilient beneath the surface of macroeconomic anxiety. More than half of mid‑market companies, 52 percent, and almost a third of small firms, 31 percent, added employees in the past year. More than one in four owners expect to add staff in 2026, despite pressure on margins. Wage growth is following a similar pattern: 37 percent reported raising pay over the last 12 months, and four in ten plan further increases this year.  

To finance those commitments, many owners are shifting the burden to their own balance sheets. The survey found that 15 percent of small‑business respondents and 13 percent of mid‑market owners reduced their personal retirement savings in the past year, while a similar share tapped existing retirement funds to support their businesses. Nearly a third of small‑business owners, and close to one‑fifth of mid‑market leaders, said they would cut their own salary before trimming employee benefits if conditions worsen.  

“Rising costs are forcing tough choices, but many owners are still putting their people first,” said Kathy Bostjancic, chief economist for Nationwide. “While job growth has slowed this past year, particularly among smaller enterprises, small and mid‑market business owners we surveyed are committed to their employees. Their optimism about their business and the economy in the year ahead may have some merit – we forecast a solid economic expansion in 2026 on tailwinds from looser Fed policy and provisions from last year’s fiscal stimulus package.”  

More than half of owners told Nationwide they are very or extremely confident their companies are prepared for future risks, and a majority rate their own financial health as good or excellent. Yet many are doing this largely without professional financial guidance. Only 16 percent of small‑business respondents and 27 percent of mid‑market owners met with an existing financial professional in the last year, and even fewer hired a new advisor.  

Public sees growth and gains – but also more pain 

If business owners are hedging their bets, the broader public is, too. Gallup’s newest reading on Americans’ expectations for the next six months shows pluralities anticipating that both the economy and the stock market will improve. At the same time, majorities expect inflation to rise further and unemployment to climb, underlining the unusual nature of the current cycle.  

In the January survey, 50 percent of US adults said they expect the stock market to go up at least a little, compared with 25 percent who foresee a decline and 17 percent who think it will be unchanged. Nearly half, 49 percent, expect economic growth to pick up, while 36 percent predict it will worsen and 13 percent say it will stay the same.  

Those readings mark a notable rebound from last spring, when market volatility and trade tensions drove expectations for stock gains down to levels last seen during prior downturns. But they also fall short of the highs reached in early 2025, suggesting that Americans are not fully convinced the worst is behind them.  

On prices and jobs, the mood is decidedly darker. Sixty‑two percent of respondents told Gallup they expect inflation to increase in the months ahead, while only 26 percent think it will fall and 9 percent anticipate no change. Half of Americans, 50 percent, now expect unemployment to rise, up 12 percentage points from a year earlier; just under a third think joblessness will decline.  

Views on these economic markers remain sharply polarized along party lines. Gallup reports that Republicans are far more likely than Democrats or independents to predict positive outcomes across all five measures it tracks, from growth and markets to rates, prices and unemployment. For advisors, that partisan divide continues to translate into very different risk appetites and portfolio conversations, depending on clients’ political identity as much as their balance sheets.  

Dow 50,000 and the return of “neutral” 

Overlaying those survey results is the market itself, which has delivered a powerful, if uneven, endorsement of the expansion.

On Friday, the Dow Jones Industrial Average vaulted 1,206 points, or 2.5 percent, to close at 50,115.67, its first‑ever finish above the 50,000 mark. The S&P 500 rose 2 percent, its strongest single session since May, and the Nasdaq Composite gained 2.2 percent as technology and crypto‑linked shares bounced back from a turbulent week. The three indexes closed higher Monday despite continued challenges for tech.

Under the surface, sentiment gauges that had flashed “fear” through much of the recent volatility have moved back toward balance. CNN’s multi‑factor Fear & Greed Index, which compiles signals from options, credit spreads, market breadth and other indicators, stood at 48 – squarely in the neutral zone – as Monday’s US markets closed.  

A neutral reading suggests investors are neither capitulating nor chasing risk aggressively; valuations may be closer to what underlying fundamentals justify, and flows tend to be driven more by earnings and rates than by emotion alone. At the same time, a neutral backdrop can be fragile. Gallup’s data show that large segments of the public still anticipate rising inflation and higher unemployment, conditions that could quickly tilt sentiment back toward fear if incoming data disappoint.  

Taken together, the new survey and market data describe an economy in transition, not at an obvious turning point.

Business owners are willing to sacrifice personal savings and income to retain workers and maintain benefits, betting that demand will justify those investments. Households, as captured in Gallup’s polling, are cautiously hopeful on growth and markets but still braced for persistent price pressures and possible labor‑market softening. Investors in aggregate are optimistic enough to drive major indexes to fresh highs, yet not so exuberant that fear has been fully banished.