Gusto’s 2026 State of Small Business report shows owners holding steady on their own prospects while prices, borrowing costs, and hiring remain challenges
SAN FRANCISCO, Nov. 12, 2026 /PRNewswire/ — Gusto today released its 2026 State of Small Business report, a survey of 1,731 owners of U.S. small businesses with 24 or fewer employees. Sixty-one percent say they’re optimistic about their own business, unchanged from a year ago. Only 18% feel that way about the U.S. economy, down from 29% in 2025, and 59% now describe themselves as pessimistic about it, up from 50%.
Among small businesses that used outside financing this year, 79% relied on a business credit card, up from 69% in 2025.
Pessimism about the economy rose in every industry, by 9 points on average. It climbed furthest among goods-producing businesses (12 points) and owners in the West (14 points). Even so, 86% of owners say their business is meeting or exceeding the expectations they had when they started it. Among optimistic owners, 68% point to customer spending and demand as the reason.
“Small business owners are telling us two things at once. Eighty-six percent say their businesses are meeting or exceeding expectations, yet more owners than a year ago say the economy is uncertain. Higher costs and expensive borrowing make it hard to plan ahead. What keeps owners confident is that their customers are still spending. If that spending slips, their confidence may falter too.” said Nich Tremper Senior Economist and Head of Gusto Insights, Gusto.
AI has become part of the workday
Sixty-seven percent of small businesses use AI tools. That includes 19% who are experimenting, 28% who use AI for at least some tasks, 15% who use it regularly across multiple functions, and 5% who say it’s built into every part of the business where the technology allows. Adoption runs highest in professional services, where 27% use AI for multiple functions or across the whole business, compared with 16% in personal services and 13% in community services.
Formal rules are catching up. One in four businesses with employees (25%) now has an AI policy, up from 15% last year. Owners are most comfortable letting AI work with limited human review on communication tasks and far less comfortable handing it data analysis or direct customer questions. About 60% of AI users are comfortable with AI drafting marketing content with limited oversight, versus 27% of non-users.
Costs keep climbing, and prices follow
Fifty-nine percent of owners say changing input prices hurt their business over the past year, compared with 3% who say the effect was positive. Goods-producing businesses took the hardest hit, with 26% reporting a much more negative impact against 20% across all businesses. Forty percent say rising interest rates have hurt.
