U.S. small businesses reported reduced spending and hiring amid concerns over military strikes against Iran and looming inflation data, according to a new report.
The U.S. Chamber of Commerce found business owners across the country are slightly more concerned about the health of their businesses as the U.S. military continues its operations in Iran. Small business owners reported a decline in planned hiring and investments.
The Chamber of Commerce’s survey was conducted from Feb. 25 – March 11, 2026. The survey sampled 751 small business owners in the United States.
In quarter one of 2026, 16% of businesses reported increasing their staff over the past year, down from 23% in Quarter 4 of 2025. Similarly, 37% of business owners planned to increase investments in the next year, a decrease from 44% in quarter four of 2025.
The Chamber of Commerce found some business owners reported concerns with rising costs, which is contributing to a greater investment in artificial intelligence use.
Overall, the Small Business Index was 67 in quarter one of 2026, down from 68.4 in quarter four of 2025. The business owners reported feeling less comfortable with their cash flow over the previous quarter. About 28% of small business owners said the economy is in “good health,” down by 10% from the previous quarter.
Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the chamber of commerce, said the data show clear concerns about the military conflict in Iran.
“The data show a clear downturn in public sentiment that shouldn’t be overlooked,” Bradley said. “This suggests small business owners are worried about the future state of the economy, but it remains to be seen if this will translate into changes in their current operations.”
The report also found 61% of small business owners planned to increase revenue, down from 65% last quarter and 69% in quarter one of 2025. About 19% of owners reported increasing concerns over providing employees with healthcare and other benefits.
The Chamber of Commerce said concerns over affording employee benefits were the highest since tracking began in quarter one of 2023.
“Businesses are navigating higher operating costs and more conservative spending behavior,” said Kate Strickland, founder of Wander Media Company. “There is opportunity, but decision cycles are noticeably longer.”
Inflation represented a top concern for most small business owners. 53% of owners surveyed said inflation was their top concern, up from 45% in the previous quarter. With rising inflation, fewer owners were willing to say they are “very comfortable” with their cash flow.
About 20% said they were “very comfortable” with their businesses cash flow, compared to 24% in the last quarter.
“The biggest challenge facing our businesses right now is financial uncertainty in the economy, which is causing tightening on discretionary spending,” said Chris Barber, a member of the National Small Business Council in the U.S. Chamber of Commerce.
