SMBs, consumers grapple with uneven economic indicators

The U.S. economy is sending mixed messages this spring, leaving small business owners, consumers and employers caught between optimism and apprehension, based on recent reports from four independent studies.

According to SmartBiz Bank's newly released State of Small Business: Industry Pulse survey, small businesses remain resilient but cautious. Drawing on feedback from more than 200 entrepreneurs across industries like construction, healthcare, and retail, the survey underscores a strong preference for simplicity and reliability in business banking.

Nearly 40 percent of respondents have been with the same primary business bank for over seven years, with most prioritizing low fees and robust online services. Despite long-standing relationships with financial institutions, many small business owners report significant challenges in securing funding.

"Small businesses are feeling immense pressure as they navigate this period of uncertainty and market volatility," said Evan Singer, CEO of SmartBiz Bank. The survey's findings highlight that while owners are cautious about growth, they are focused on streamlining financial operations to weather near-term challenges.

Consumer confidence drops

Meanwhile, consumer confidence has taken a sharp hit. The Conference Board reported its Consumer Confidence Index fell to 86.0 in April, marking a fifth consecutive monthly decline and reaching levels not seen since the early days of the COVID-19 pandemic. Notably, the Expectations Index—which gauges consumers' short-term outlook for income, business and labor market conditions—plummeted to 54.4, the lowest since 2011.

Stephanie Guichard, senior economist at The Conference Board, pointed out that "the decline was largely driven by consumers' expectations," with concerns mounting about employment prospects and income growth.

Alarmingly, the share of consumers anticipating fewer jobs in the next six months rose to 32.1 percent, reminiscent of figures from the Great Recession. Consumers across all political affiliations, age brackets and income levels reported diminished confidence, with high-income households and mid-career adults between 35 and 55 years old showing the steepest drops.

Bankruptcy filings rise

Adding to the unease, bankruptcy filings have ticked upward. Data from G2 Risk Solutions showed that U.S. bankruptcy filings rose by 0.7 percent in the first quarter of 2025 compared to the previous quarter, and were up 7.8 percent year-over-year. While still below pre-pandemic highs, filings appear poised to climb through the rest of 2025, with the Mountain region and states like Montana, New Mexico and Oregon showing notable spikes, researchers found.

"The increase in filings during the first quarter points to a likely rise in bankruptcy activity for the remainder of 2025," said Ryan Sanders, director of strategic accounts at G2 Risk Solutions, though he noted that overall volumes have yet to return to historic norms.

Labor market a bright spot

Amid these signs of strain, the labor market remains a relative bright spot, though momentum has cooled. The April ADP National Employment Report showed that private-sector employers added 62,000 jobs in April, with moderate gains in sectors like construction and leisure/hospitality.

However, sectors such as education, health services and information lost jobs, reflecting uneven growth. Pay gains also showed mixed results: while wages for job-stayers rose 4.5 percent year-over-year—a slight deceleration—job-changers saw their wages climb 6.9 percent, an uptick from March.

"Unease is the word of the day," said Dr. Nela Richardson, chief economist at ADP. "Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data."

In sum, while employment numbers suggest a labor market that continues to expand, underlying cracks are evident in consumer sentiment and financial stability. Small businesses are holding steady but are increasingly wary of what lies ahead. Rising bankruptcies and plunging consumer confidence highlight persistent vulnerabilities, even as hiring and wage gains offer reasons for cautious optimism.

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