BofA Sees 'Cautious Optimism' From US Business Owners

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00:00Bank of America publishing its annual business owner report with an optimistic view,

00:04finding over half of business owners expect to maintain staff levels over the next 12 months,

00:08with only 1%, yes, just 1% of business owners planning to lay off employees.

00:13Sharon joins us now for more. Sharon, an optimistic take. What else did you find?

00:17Talk to me about revenue expectations, plans to expand. Does it look good going into 26?

00:24Well, it's great to be here with you all today. And yes, the view is really cautious

00:29optimism as we look ahead at the next 12 months. So 74% do expect their revenues to increase over the

00:36next 12 months. And over half believe the national, local, and global economy will improve. And 60%

00:45plan to hire. So as you think about what's happening in small and mid-sized businesses, I would say that

00:53it's very cautiously optimistic outlook would be how I would characterize this.

01:00Sharon, one aspect of this is their ability to pass along prices, because a lot of them

01:04were affected and have been affected by inflation. You saw that in a significant way. 88% say they're

01:09currently being impacted by inflation, which is consistent with last year. How easy has it been

01:14for them to pass along those price increases?

01:18Well, you're right. Inflation has been an issue. Nearly 88% said they have been impacted by inflation. And then the

01:26other item is supply chain and making sure that they have the right sourcing for their materials. So, you know,

01:33they are passing along some of those price increases, and some are, you know, taking it. It just depends on what type of

01:40industry you're in and how flexible the ability is to pass on those to consumers. So, we hear both. But I will tell you that

01:49inflation is starting to cool, and the supply chains are starting to stabilize as we move forward into 2026.

01:59Sharon, there's a good degree of nervousness this morning in some of the consumer-facing stocks and some of the retailers. Home Depot

02:05came out, a real concern there about how much it's a housing-specific story and how much it's a broader

02:09consumer pullback. I'm just wondering, can you pull together what you're hearing from businesses with their

02:15hiring plans, with their sense of the economy? Does it jibe with the sense that things might be slowing a lot

02:20more than the overall data might suggest?

02:25Well, in our data, and we do not only survey clients, but we use our data that we have available

02:31through the bank. We are the number one lender to small businesses in the U.S., and that's, you know,

02:36been for the last 17 consecutive quarters. So, as you think about what's happening with our client base,

02:42we are seeing profits still rising. And as you look at what's happened over the past five years,

02:48most businesses, their revenues have increased, their profitability have increased, at least

02:53what we are seeing in our numbers and in the conversations we're having across the desk from clients.

03:00So, you know, as you think about different industries, different sectors, you will see

03:05different outcomes. But at the end of the day, we are seeing still strength in the consumer spending,

03:10and that is fueling business on Main Street.

03:15Sharon, have you seen any softening in the relationship between expectations for revenue

03:19and expectations for hiring? I think this is really important. I'm encouraged by the numbers I see in

03:24your survey, but is that number lower than it traditionally is, that 43% that expect to carry on hiring,

03:30would it typically be higher alongside that higher, more robust expectation for revenue?

03:35You know, I think we've seen, you know, it ebbs and flows through the years, but I would say,

03:41you know, 41% expecting to hire over the next 12 months. That is a strong number,

03:46as you think about what you might hear in the NFIB surveys or with even plan layoffs. We are not

03:53seeing that within the small and midsize space. We are seeing, as you noted in the beginning of this

03:59segment, only 1% do plan to lay off any workers. So we are seeing more efficiencies gained through AI.

04:08There's a lot of investment happening in AI, and that's being used more for marketing

04:12and driving new customers. So the spirit of the American business owner, both small and midsize,

04:20as we go into 2026, you know, there is a recognition that it will continue to grow. And really, because

04:28they are smaller, we do have the opportunity to be more nimble and pivot based on what's happening

04:34with the economy and their local markets.

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