Small businesses across the U.S. are sounding the alarm: sales growth is losing steam. According to the Federal Reserve’s latest Beige Book report, business owners in multiple districts cited rising costs, lower consumer demand, and uncertainty around tariffs as the key drivers behind the slowdown.

Sales Growth Weakening

In most Fed districts, small business contacts said sales were either flat or showing modest gains — a clear step down from stronger growth seen earlier this year.

Businesses in the Richmond, Dallas, and St. Louis districts reported “softening demand” and “growing caution” from consumers.

Higher costs, driven by labor, materials, and new tariffs, are also making it harder for businesses to maintain margins. Many say they’ve passed on price increases as much as they can, but customer resistance is rising.

“Some small firms are pulling back hiring or delaying capital investments due to uncertain outlook,” the Fed noted.

Tariffs & Trump: Confidence Hit?

Small business sentiment took another hit after President Trump’s sweeping tariff announcements this week.

Axios reports that small firms are especially worried about upcoming reciprocal tariffs on April 2, as many rely on imported goods and materials.

National Federation of Independent Business (NFIB) confidence dipped slightly in March, with expectations for sales over the next 6 months down to their lowest since 2023.

“We’re getting squeezed on both ends — higher input costs and customers who can’t afford to pay more,” one Texas-based manufacturing CEO told Bloomberg.

Outlook: Cautious Optimism with Risks Ahead Despite the pressure, the Fed said firms aren’t panicking yet. Many remain hopeful for a soft landing if inflation eases and the Fed begins cutting rates later this year.

📌 Wage pressures have cooled slightly, but many small businesses say skilled labor remains hard to find.

🛠️ Construction, hospitality, and retail sectors are seeing the biggest hiring slowdowns.

Final Take The Fed’s Beige Book paints a picture of resilience — but with cracks forming. Tariffs, softening demand, and sticky inflation are squeezing small businesses. April’s policy moves could make or break confidence for Main Street.

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