Small Business Survey Reveals Cautious Optimism Amid Rising Costs and Slow AI Adoption

The August 2025 installment of the Main Street Business Survey, powered by the Freedom Economy Index, reveals that small business owners remain primarily concerned about rising costs and declining consumer demand, with only half having begun exploring artificial intelligence implementation in their operations. The survey, now in its fourth year, indicates that 25% of respondents identified rising costs as their top concern, while 22% cited declining consumer demand as their primary issue, reflecting the ongoing impact of elevated inflation from recent years.

Michael Seifert, CEO of PublicSquare, noted that the findings suggest an economy emerging from a difficult period, with business owners having weathered inflation, supply chain disruptions, and mandates without seeking bailouts. The survey introduces the new State of Main Street Index, which debuted at 57 on a 100-point scale, indicating positive momentum as scores above 50 signal economic improvement. This innovative index assesses current economic health, customer traffic, revenues, and forward-looking expectations for growth, inflation, and hiring over the next six months.

Regarding artificial intelligence adoption, 45% of business owners reported not using AI in their operations, suggesting significant potential for future implementation. Among those utilizing AI, 32% found it most beneficial for marketing and advertising, while 9.2% reported advantages in business operations, 7.9% in customer engagement, 3.6% in financial management, and 2% in workforce management. Notably, 26.6% of AI adopters indicated that the technology has reduced their staffing needs, pointing to potential labor market impacts as AI adoption continues to expand.

The survey also examined small business perspectives on political and policy matters, showing that 91% of business owners agree with Elon Musk's position that the federal budget needs balancing, though only 34% support his opposition to raising the debt ceiling. By a margin of better than three to one, business owners expressed that Musk's plans for a new third party would be bad for America's economic future. The Department of Government Efficiency received positive ratings, with 38.3% characterizing its performance as excellent and another 37.6% rating it as good.

Andrew Crapuchettes, CEO of RedBalloon.work, observed that business owners are making cautious investments in growth, representing a significant shift from the previous year's defensive posture. However, persistent high costs and policy uncertainty continue to slow investment decisions, with small business owners seeking stable regulatory environments to support long-term planning regarding AI implementation, expansion, and hiring. The complete survey results are available at https://www.redballoon.work/freedom-economy-index.

Krystal Parker, President of the U.S. Christian Chamber of Commerce, emphasized business resilience and the free market's capacity to reward risk-takers, while noting that continued high consumer prices could lead to reduced spending that slows economic momentum for all businesses. The Freedom Economy Index represents a collaborative project between PublicSquare, RedBalloon.work, and the U.S. Christian Chamber of Commerce, providing accurate insights into America's small business community through comprehensive quarterly surveying.