Hiring has remained resilient. More than half of mid-market businesses (52%) and nearly one-third of small businesses (31%) added employees in the past year, and more than one-quarter of owners expect to hire in 2026.

Wage growth has followed a similar pattern. Over one-third of business owners (37%) increased wages in the past 12 months, and four in ten expect to raise wages again in 2026, even as margins remain tight. Looking ahead, one in five business owners (20%) say improving employee benefits is among their biggest business opportunities over the next 12 months.

For business owners worried about inflation and an uncertain environment, sustaining these investments has often meant absorbing costs personally:

• 15% of small business owners and 13% of mid-market owners reduced their retirement savings in the past year.
• 14% of small business owners and 13% of mid-market owners tapped into personal retirement funds to support their businesses in the past 12 months.
• If needed, nearly one-third of small business owners and nearly one-fifth of mid-market owners say they would choose to cut their own salary before reducing employee benefits.
• Roughly one in ten business owners canceled or delayed purchasing insurance in the past year, potentially increasing their exposure to risk.

“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. Their optimism about their business and the economy in the year ahead may have some merit – we forecast a solid economic expansion in 2026 on tailwinds from looser Fed policy and provisions from last year’s fiscal stimulus package.”

How Business Owners are Positioning for the Future
Despite ongoing economic pressure, many business owners report confidence in the near-term outlook for their own companies. More than half of business owners (57%) say they are very or extremely confident their business is prepared for future risks, and large majorities rate their current financial health as “good” or “excellent.”

That confidence extends cautiously to the broader economy. More than half of business owners expect economic conditions to improve in 2026.

One way business owners are responding to economic pressures is through technology investment. Among mid-market firms in particular, AI is playing a growing role in managing costs and improving efficiency.

More than one-third of mid-market businesses (35%) invested in AI technology in the past year, and among those that did, an overwhelming majority (93%) report seeing a positive return on investment. At the same time, concerns remain: nearly two-thirds of business owners say increased use of AI presents a cybersecurity risk.

Meanwhile, small businesses are taking a more defensive approach. Owners of smaller firms are focusing on preserving cash flow by prioritizing customer retention (30%) and reducing overhead (26%), while also strengthening supplier relationships (25%). Small and mid-sized firms face similar economic pressures, but differences in their responses largely reflect differences in financial capacity.

Rising Risk, Limited Guidance
As business owners navigate economic volatility, workforce strain, rising prices, supply chain disruptions, and rapid technological change, many are not taking advantage of professional guidance to reduce risk. Just 16% of small business owners and 27% of mid-market owners met with their current financial professionals for guidance in the past year; even fewer hired a financial advisor (13% and 19%, respectively).

While financial advisors have an opportunity to engage business owners, insurance agents remain a trusted resource. Nearly two-thirds of small business owners (63%) and more than four in five mid-market owners (81%) currently work with an agent. Amid rising business risks and cost pressures, many owners say they would welcome broader conversations beyond coverage – including rising liability costs, pricing pressures, and supply chain risks.

As owners continue to protect customers and employees, early, integrated financial and insurance guidance can play a critical role in helping them balance near-term challenges with long-term goals.

More findings from Nationwide's Economic Impact survey can be found here.

Methodology
Nationwide commissioned Edelman Data & Intelligence (DXI) to conduct a nationally representative online survey with 400 U.S. small business owners and 400 mid-market business owners from November 10–December 1, 2025.

Investment in artificial intelligence (AI) throughout 2025 has not only driven the equity market’s ebullient performance, but it has also offered a significant positive contribution to the year’s GDP growth.

According to Nationwide Economics’ calculations, business investment in software, IT equipment and structures that consists significantly of artificial intelligence and data centers was responsible for an outsized 30 percent of GDP growth in Q2 2025 and 20 percent of the economy’s expansion in Q1. These large contributions are striking but not surprising given that capital expenditures by the hyperscalers (large cloud computing service companies) represented more than 50 percent of their operating cash flow in Q2, an all-time high.

In another sign of widespread enthusiasm, AI stocks are largely responsible for the double-digit, year-to-date return for the S&P 500® Index and equity analysts are broadly very optimistic about the sector going forward. While there has been some volatility most recently, a popular ETF for AI stocks is up a very enthusiastic 30 percent year-to-date.

How this impacts the economic outlook
Investment in artificial intelligence (AI) and data centers today accounts for a significant share of U.S. economic growth, corporate spending plans and equity market performance. While impressive, this also means that the economy’s topline growth and the stock market gains are very reliant on the persistence of enthusiasm about this emerging technology. Looking ahead, how large the return on AI investment turns out to be could have profound impacts on productivity growth and the broad economy in 2026.

This spending slowdown isn’t limited to the holidays. Since the start of 2025, consumers say they’re making fewer impulse purchases (47%), buying fewer luxury items (41%), and buying more used or secondhand goods rather than new (32%).  

That caution is spilling into bigger financial decisions. Almost half (48%) delayed or canceled a vacation and 46% delayed or decided not to purchase a car. A significant portion of Americans also put off major life milestones, such as having a baby (21%), postponing a wedding (19%), and retiring (17%).

At the same time, debt reliance is rising. One in 5 Americans (20%) have relied more on debt today than they did a year ago. Of those, 61% carry a balance on their credit card(s), 23% took out a personal loan from a bank or other lender, and 17% borrowed from their 401k/retirement plan.

“Even though many Americans say they feel financially stable today, the way they’re behaving tells a different story,” said Kathy Bostjancic, Chief Economist at Nationwide. “This year has seen a lot of mixed signals, with some improvement in wages on the one hand but weak job growth, continued inflationary pressures and geopolitical concerns on the other. As a result, consumers are proceeding with caution because they are unsure just how firm their financial footing will be in the near future.”

Lingering Pessimism Shapes Outlook for 2026

Despite relative confidence in their personal financial security, Americans feel uneasy about what lies ahead. More than a third (35%) believe the economy will get worse in 2026. Among those with a pessimistic outlook, 78% point to higher inflation as a key driver, while 71% cite the impact of global trade tensions and tariffs. Additionally, one in four (25%) believe the stock market is overvalued or in a bubble, contributing to broader concerns about financial stability.

This growing unease about the economy is shaping their financial priorities. Looking ahead to 2026, a significant share of consumers anticipate greater difficulty in reaching key financial goals, including managing healthcare costs (43%), paying off debt (39%), saving for retirement (34%), and protecting their portfolios from market volatility (31%).

Financial Resilience Begins with Trusted Advice

Even as financial anxiety grows, most Americans are facing financial uncertainty without professional support. Only one in four (25%) consumers surveyed currently work with a financial advisor. Yet among those who do, nearly half (48%) say their advisor is their most trusted financial resource, providing perspective and support that can be difficult to find elsewhere. 

“Professional support can make a meaningful difference for savers as they navigate their short- and long-term financial goals,” said Kevin Jestice, president of Nationwide Retirement Solutions. “A trusted financial professional can help people step back from immediate worries and take a long view—whether that means finding savings today or creating a strategy to stay on track for retirement. Additionally, many workplace retirement plans offer helpful education and planning resources to their participants.”

Insurance Confidence Hinges on Human Connection

As consumers navigate economic uncertainty, many are turning to trusted sources for help understanding and managing their insurance needs. Nationwide’s survey reveals that 46% of consumers seek help or information about insurance products from an insurance agent, making agents the most relied-upon source, well ahead of friends and family (37%), social media (19%), or AI tools (17%).

Despite the growing presence of digital tools, over half of consumers (56%) say they never use AI for information about home or auto insurance. This suggests that while technology may offer convenience, it hasn’t yet earned the trust required for more complex or personal financial decisions.

“When people are feeling uncertain about their finances, they’re looking for clarity and control wherever they can find it,” said Casey Kempton, Nationwide’s P&C President of Personal Lines. “That’s where independent agents shine because they remain the most trusted source. A simple policy review can go a long way in helping clients understand what they’re covered for and how to make smart adjustments that fit their current budget.”

The 2025 Nationwide Economic Impact Survey underscores an evolving financial landscape where stability and uncertainty coexist. As Americans prepare for a new year filled with unknowns, those who seek guidance and take action today may be best positioned to turn caution into long-term confidence.

To learn more about Nationwide’s 2025 Economic Impact survey, click here. 

Methodology

Nationwide commissioned Edelman Data & Intelligence (DXI) to conduct a nationally representative online 15-minute survey of 2,000 US consumer adults aged 18 and older from September 5-23, 2025. The survey was weighted to be representative of the U.S. population by age, gender, region and ethnicity.  

As a member in good standing with The Insights Association as well as ESOMAR Edelman Data and Intelligence conducts all research in accordance with local, national, and international laws as well as in line with all Market Research Standards and Guidelines.

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Nearly a year after first discussing the topic, Nationwide Executive Vice President and Chief Technology Officer Jim Fowler and Nationwide Chief Economist Kathy Bostjancic decided to get together again to talk about the progression of AI over the last 12 months, investment levels in the new technology and the types of careers that are likely to develop as a result of the generative AI advances.

Listen to the conversation here, or wherever you get your podcasts.  

COLI is life insurance for employers serving as the purchaser, beneficiary and owner, while BOLI is life insurance where a bank is the purchaser, beneficiary and owner. COLI and BOLI policies help businesses finance employee benefits and cover the expenses associated with replacing insured employees if that employee retires or passes away.

“Business owners are still reeling from the impacts of COVID, facing economic turbulence and focusing on attracting and retaining talent in a continued tight labor market,” said Dowdy. “Economic downturns can lead businesses to prioritize cost-cutting measures over investments in COLI and BOLI policies, but they can be great solutions to address these issues, particularly for those business owners interested in informally funding their deferred compensation plans.”

Employment market dynamics, including trends in executive retirement, are shaping demand for COLI policies. In today’s tight labor market, COLI policies can attract and retain talent by informally funding benefit promises made to employees, ensuring the business has the funding to meet these promises down the road. COLI policies can also be part of a business owner’s succession plan, mitigating risks as executives retire.

Additionally, the current economic environment can make COLI and BOLI policies more beneficial for business owners. With the consumer price index rising 3.5% from a year ago, rate cuts are expected to be delayed until September – meaning high interest rates are going to be sticking around for some time, according to Bostjancic.

“For most people, inflation is a scary thing, with Nationwide’s Advisor Authority survey finding investors listing inflation as their top concern over the next 12 months. In the BOLI space, however, the current environment is actually beneficial for banks who want to take advantage of current policy rates,” Dowdy said. “One of the other things Nationwide is doing to account for inflationary trends is adjusting COLI policy features and pricing to benefit our business owner customers.”

Nationwide has made several enhancements to its registered product, the Nationwide Innovator Corporate Variable Universal Life (VUL) policy, including a more streamlined, easy to understand, lower cost structure and improved institutional pricing. The VUL features over 140 investment options, as well as the lowest-cost fund lineup Nationwide has offered in the business life insurance market¹. Businesses can also quickly accumulate cash value as a result of the product’s institutional pricing.

“There is so much opportunity in this market at this time, and we’re really proud of our 26-year commitment in this space,” Dowdy said. “Alongside our financial professional partners, we’re helping business owner clients face whatever comes their way through our ever-evolving product suite and our dedication to extraordinary care.”

Visit https://nationwidefinancial.com/products/business-life for more information and resources on business life insurance with Nationwide.

¹ Weighted average fund expense is an average for the entire lineup and is based on Nationwide and Morningstar® historical data as of May 1, 2022
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04/2024

Nationwide Executive Vice President and Chief Technology Officer Jim Fowler joined a recent Nationwide Market Insights podcast to talk with Nationwide Chief Economist Kathy Bostjancic about how the company is using AI and the potential for the technology to deliver increased levels of productivity for the economy.   

From use cases to Nationwide’s history with the technology and even AI’s estimated potential $4 trillion impact on the economy, it’s a fascinating discussion. Listen to the conversation here.  

Nationwide Chief Economist Kathy Bostjancic recently offered her analysis to CNBC and Bloomberg TV, noting that key economic indicators point to a U.S. economy that is incredibly resilient and growing, despite the U.S. Federal Reserve’s ongoing efforts to slow the economy to bring down inflation.

Increasingly, Bostjancic told the news outlets, a no landing scenario is emerging as strong retail sales and jobs data could convince the Federal Reserve Open Market Committee to stay aggressive in its inflation fight.

Watch Bostjancic’s Bloomberg discussion by clicking the picture below. Her analysis begins at the 9:12 mark.

To stay up-to-date on Bostjancic’s latest commentary, visit the Nationwide Economic & Market Commentary page.  

The information provided by Nationwide Economics is general in nature and not intended as investment or economic advice, or a recommendation to buy or sell any security or adopt any investment strategy. Additionally, it does not take into account any specific investment objectives, tax and financial condition or particular needs of any specific person. The economic and market forecasts reflect our opinion as of the date of this report and are subject to change without notice. These forecasts show a broad range of possible outcomes. Because they are subject to high levels of uncertainty, they will not reflect actual performance. We obtained certain information from sources deemed reliable, but we do not guarantee its accuracy, completeness or fairness.

Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. © 2023 Nationwide

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Only 16% of consumers rated the U.S. economy as good or excellent today, an 8-point decline since September 2022. This sentiment is partly driven by rising interest rates, with 70% of consumers reporting they are concerned about them – up from 61% in September 2022. Many are also uneasy with the Federal Reserve’s current policies, with more than a third (38%) believing it should cut interest rates to ease pressure on the U.S. economy.

“Despite elevated inflation, trouble in the banking sector, and 10 consecutive interest rate hikes, we continue to forecast a moderate recession in the second half of this year, which stands in contrast to fears that we’re heading for another Great Recession,” said Kathy Bostjancic, Nationwide’s Chief Economist. “Consumers are understandably worried, but consumer and business debt burdens are much less than they were 15 years ago and that should limit the degree of the economic downturn.” 

Consumers are making tradeoffs to manage inflation
Inflation continues to squeeze consumers’ finances, with 82% reporting they are concerned about inflation and rising living costs today, up five points since September 2022. As a result, more than half (57%) of Americans report dipping into their savings to pay for everyday expenses within the past 12 months. This is even higher for Gen Z and Millennial consumers at 64% and 66%, respectively.

Americans have made other sacrifices or decisions in the past 12 months due to rising inflation, including:

• Eating out less (54%) and driving less (37%)
• Delaying a major purchase (32%)
• Relying more on credit cards (23%)
• Looking for ways to save money on premiums with their existing insurance policies (23%)
• Looking for a better paying job (20%)
• Reducing their retirement plan contributions (11%)
• Decreasing coverage/limits on existing insurance policies (10%)

Because of these choices, the data signals some consumers have had to put their financial goals on hold due to inflation. Consumers’ top financial goals today include saving for retirement (44%), paying off debt (44%), building credit (24%) and saving for large purchases (22%).

Consumers need help navigating and planning for uncertainty
Despite these concerns and risks, most Americans, especially younger ones, may not be turning to the right sources for help. Most consumers surveyed (70%) aren’t using a financial advisor, citing concerns around costs (46%), not having enough assets (37%) and not knowing who to go to (22%). Consumers’ say their sources for advice and support on personal finances include:

• Friends or family (48% Gen Pop*, 66% Gen Z)
• Online resources (26% Gen Pop, 34% Millennials)
• Social media (11% Gen Pop, 22% Gen Z)
• ChatGPT (3% Gen Pop, 8% Gen Z)
  • Notably, 34% of Gen Z and 37% of millennials say they trust the financial advice provided by ChatGPT and other AI chatbots

“In moments like this, it’s easy to make emotional investing decisions,” said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute. “We live in a do-it-yourself world, but the cost of a short-term financial mistake can reverberate for years. A financial professional can work with you to build a plan that will help you weather near-term economic adversity and set you up for success in retirement.”

To view more findings from Nationwide’ 2023 Economic Impact survey, view the report here. 

 Methodology
Nationwide partnered with Edelman Data & Intelligence to conduct a 15-minute online survey among a sample of 2,000 nationally representative adult consumers between March 30 and April 13, 2022. As a member in good standing with The Insights Association as well as ESOMAR Edelman Data and Intelligence conducts all research in accordance with local, national and international laws as well as in line with all Market Research Standards and Guidelines.