### Nearly Half of Businesses Expect Economic Improvement
A recent survey conducted by Umpqua Bank reveals that nearly half of businesses in the U.S. expect the economy to improve in the next 12 months. This sentiment is particularly strong among middle market companies, with 60% expressing optimism, compared to 44% of small businesses. This marks a significant milestone, as it represents a four-year high in positive economic outlook.
### Small Business Outlook Surges
Small businesses have shown a remarkable 12-month outlook improvement, jumping 14 points since last year. While 55% of these businesses still plan to focus on cutting costs, a noticeable shift reveals that the desire to explore growth opportunities has gained traction. Key indicators of growth are rebounding, with small businesses now more willing to seek financing for expansion and investments in technology.
### Middle Market Confidence Remains Robust
Middle market companies demonstrate strong confidence, with 69% prioritizing growth over cost-cutting strategies. Despite the persistent challenges posed by inflation and potential tariffs, many of these companies foresee an uptick in demand for their products and services. Their general optimism remains near all-time highs, reflecting a commitment to expansion even amid uncertainty.
### Navigating Tariff Challenges
The potential impact of global tariffs poses a significant concern for many businesses, as highlighted by 51% anticipating negative effects. In response, approximately 50% are planning to stockpile inventory to mitigate these impacts, while others are looking at adjusting prices strategically. Interestingly, nearly half of the surveyed businesses intend to absorb additional costs, reflecting a cautious yet proactive approach in light of external pressures.
### Generative AI: A New Frontier
The adoption of generative AI technology is reshaping business strategies across sectors. For the second year running, it’s the top investment priority among middle market companies. Over 85% of these businesses, along with 50% of small enterprises, plan to invest in AI capabilities within the next year. This trend not only demonstrates the growing importance of technological adaptation but also hints at a positive shift in staffing levels, as many businesses report that AI adoption is contributing to increased employment.
### Cybersecurity: A Growing Concern
As businesses increasingly rely on digital tools, cybersecurity has become a major focus, with 30% feeling very well prepared to prevent attacks. Most companies recognize the need to bolster their defenses against cyber threats, implementing measures such as regular audits, employee training, and enhanced banking solutions. While 82% of businesses express at least moderate confidence in their cybersecurity preparedness, the need for vigilance remains paramount.
### Focus on Financial Management
While optimism abounds, there is a clear recognition of the need to manage financial challenges. Among small businesses, there’s a significant increase in those prioritizing growth opportunities over sheer financial management. As they navigate economic uncertainties, small business leaders are displaying a remarkable resilience and readiness to adapt.
### Methodology of the Survey
The insights presented stem from the Umpqua Bank 2025 Business Barometer, which surveyed 1,290 executives from small and middle market companies nationwide. This comprehensive study, conducted in collaboration with DHM Research, captures the sentiments of businesses with annual revenues ranging from $500,000 to $500 million.
### About Umpqua Bank
Umpqua Bank stands as a leading financial institution committed to supporting the diverse needs of businesses and consumers across eight western states. With a network of nearly 300 branches, this award-winning bank has established a reputation for exceptional customer service and is recognized as one of Oregon’s Most Admired Companies for 20 consecutive years.
