Provident Bank Annual Economic Outlook Survey: Business Owners Shift from Passive Optimism in 2025 to Active Investment in 2026

Core Insights - Businesses are shifting from a "wait and see" approach to active expansion and investment in 2026, driven by increased confidence in the economy and their own operations [1][2][3] Business Sentiment - Over 50% of business owners believe the U.S. economy will improve this year, and over 60% expect their own businesses to be in better shape [2] - The transition from passive optimism to active investment is evident, with business owners now funding their growth strategies [3] Capital Expenditures - 70% of businesses plan to increase capital expenditures in 2026, up from 68% last year, with significant spending plans rising from 11% to 19% [7] Hiring Trends - 57% of businesses intend to increase hiring, an increase from 53% last year, with those planning a "significant increase" in staff rising from 8% to 17% [7] AI Adoption - Engagement with AI tools is increasing, with 58% of businesses either using or planning to adopt AI in 2026, up from 41% last year [7] Challenges - Inflation remains the top concern for business owners, though concern has decreased from 60% to 49%. Political and policy uncertainty has risen, with 37% citing it as a key challenge, up from 29% [4][5] Generational Insights - Younger leaders, particularly Gen Z, are more optimistic, with 44% expecting their businesses to be in "much better shape," compared to 14.5% of Boomers [7]