Nearly half of U.S. business owners rate the economy as “poor” or “fair,” according to a Nationwide survey of small and mid-market business owners, yet many also express confidence in their preparedness to navigate business risks, and are planning to maintain investments in their workforce.

“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.”

Nationwide surveyed business owners at small (fewer than 50 employees and less than $10 million in revenue) and mid-market business (between 51-100 employees and $10 million to $500 million in revenue), as well as independent insurance agents.

A Resilient Workforce Despite Economic Headwinds

Despite concerns about inflation, high interest rates, and recession risks, business owners have continued to prioritize their workforce, according to Nationwide. More than half of mid-market business owners (52%) and nearly one-third of small businesses owners (31%) expanded their headcount over the past year, and roughly 25% of all business owners surveyed anticipate hiring additional staff in 2026.

Wage growth has similarly held steady. Over one-third of all business owners (37%) raised wages in the past 12 months, with four in ten planning additional increases in 2026. Beyond wages, about 20% of owners identify improving employee benefits as among their top business opportunities in the coming year.

The commitment to employees has come at a considerable personal cost.

Business owners have increasingly tapped personal resources to sustain these investments, with 15% of SBOs and 13% of MMBOs reducing their retirement savings in the past year.

An additional 14% of SBOs and 13% of MMBOs withdrew from personal retirement funds to support their operations. If forced to choose, nearly one-third of SBOs and nearly one-fifth of MMBOs said they would cut their own salary before reducing employee benefits.

Economic Optimism and AI Adoption

Despite widespread economic concerns, a majority of business owners surveyed (57%) reported confidence their business is prepared for future risks, and most rate their current financial health as “good” or “excellent.” This cautious optimism extends to the broader economy — more than half of owners anticipate economic conditions improving in 2026.

Artificial intelligence is playing a growing role in managing costs and improving efficiency, according to the survey.

Most business owners are either currently investing in AI — 44% of SBOs and 77% of MMBOs — or are interested in doing so in the future. Of those who have invested, nine out of 10 reported seeing a positive return on investment (ROI) on their AI initiatives.

Some 69% of SBOs and 87% of MMBOs said they trust generative AI tech like ChatGPT to provide advice related to the operations of their business. However, roughly two-thirds of respondents of both sizes are also concerned the use of AI technology could increase cybersecurity risk for their businesses, the report said.

Professional Guidance from Agents

As risks mount — from workforce strain to supply chain disruptions to cybersecurity threats — insurance agents remain a trusted relationship for business owners, with 63% of SBOs and more than 80% of MMBOs working with an agent, the survey found.

Many business owner respondents reported taking various steps to lower their insurance costs over the past year, Nationwide said.

The top actions taken by small business owners were: sought competitive bids or renegotiated with current carrier, 33%, increased deductibles to lower premiums, 32%, and eliminated certain optional coverages, cited by 27%.

Mid-market business owners’ top action to lower insurance costs was to bundle policies or consolidate coverage with a single carrier, cited by 41%, followed by seeking competitive bids, 38%, and increasing deductibles to lower premiums, 36%.

Nationwide also surveyed insurance agents, with 92% reporting an uptick in customers seeking to renegotiate their policies or lower their rates. Nearly as many agents, 89%, confirmed that rates and premiums were rising for their customers.

In conversations with customers, agents identified multiple approaches to help customers manage economic challenges, with the top three being: check the discounts they qualify for, 71%, use risk management and mitigation services provided by the carrier, 64%, and change insurance carriers, 55%.

View the full survey findings here. &