Small Business Confidence Climbs Four Points Despite Inflation Drag

Small business confidence rose four points to 70.5 in the third quarter of 2026, according to the latest Justworks and U.S. Chamber of Commerce Small Business Index. The score landed just below the record 72.0 set one year earlier.

The gain rests on owners' assessments of their own operations. Seven in ten small businesses — 71% — describe their business as being in good health. The share rating their health as "very good" jumped eight points to 35%. Cash flow comfort widened too: 72% of respondents say they are comfortable with their cash position.

The survey ran from August 4–18, 2026.

Optimism Stops at the Front Door

Confidence in owners' own businesses has not carried over to their view of the broader economy. Just 27% of small businesses believe the national economy is in good health, unchanged from Q2 2026. Only 33% say the same about their local economy, flat from the prior quarter.

Inflation remains the single biggest obstacle. More than half of respondents — 54% — named it their top challenge. That marks the third consecutive quarter in which at least 50% of small businesses have cited inflation as a leading concern.

One business owner explained how price pressure reaches beyond the ledger. "Inflation doesn't stay contained to the business side of the ledger; it follows employees home, showing up in their grocery bills, rent, and gas prices. When people are financially stretched outside of work, it shows up inside work too: more stress, less focus, and less capacity to bring their best selves to the job," said Stevie Straka, VP of people at Blumira, an Ann Arbor, Michigan-based IT security operations company that runs its business on Justworks.

Investment Plans Hold Firm

The inflation drag has not dented forward expectations. Nearly two-thirds of small businesses — 62% — expect revenue to rise over the coming year. Another 38% plan to increase investment, and 36% expect to add staff.

Benefits Spending Expands Under Cost Pressure

The quarterly report also tracked what small businesses are spending on their workforces. Seven in ten now offer at least one benefit to full-time employees, and every major category gained ground year over year:

• Health insurance: 46%, up from 41% last year
• Paid vacation: 40%, up from 30%
• Dental and vision coverage: 31%, up from 21%
• Retirement plans: 27%, up from 22%

Owners face real constraints in funding those benefits. Rising costs, cited by 35%, and limited budgets, cited by 34%, were the most commonly named barriers.

Even so, the perceived payoff is nearly unanimous. Nearly all small businesses agree that benefits matter for demonstrating care for employees (95%), retaining them (94%), and attracting new hires (89%).

The pattern points to a widening gap between how owners judge their own firms and how they judge the economy around them. With inflation still the top-cited challenge for a third straight quarter and revenue expectations nonetheless running high, small businesses appear willing to keep spending on people even as they discount the macro picture.