What the 2025 Economic Outlook Means for Small Businesses
As we move into the second half of 2025, the 2025 economic outlook for small businesses is showing mixed signals, with recent data highlighting both challenges and areas of resilience for small business owners. The environment remains cautiously optimistic, but recent trends underscore the importance of careful planning and flexibility.
Growth and the “Soft Landing” Narrative
The first quarter of 2025 saw a contraction in the U.S. economy, with real GDP decreasing at an annual rate of 0.5%, marking the first quarterly decline in three years. According to the Bureau of Economic Analysis, this slowdown was largely driven by a surge in imports ahead of anticipated tariff increases and a decline in federal government spending. Consumer spending growth also slowed to just 0.5%, the weakest pace since 2020.
Looking to the second quarter, most forecasts point to a modest rebound rather than robust growth. The Philadelphia Federal Reserve projected a 1.5% annualized increase in GDP, while the Atlanta Fed’s GDPNow model offered a slightly more optimistic estimate of 2.6% as of early July. Analysts expect Q2 to be the strongest quarter of the year, with growth likely slowing again through the fall.
Labor Market and Business Sentiment
The labor market remained broadly stable through the second quarter. According to the U.S. Bureau of Labor Statistics, the unemployment rate held steady around 4.2% in April and May, dipping slightly to 4.1% in June. However, business sentiment has grown more cautious. A recent CEO survey from Business Roundtable showed declining optimism around hiring and capital investment, pointing to uncertainty around economic growth and future policy direction.
Other Key Economic Indicators
Consumer spending, a key engine of the U.S. economy, slowed sharply in the first quarter and has shown only modest recovery since. Inflation, while cooled from its 2022 peak, remains above the Federal Reserve’s 2% target, with the Fed’s own June 2025 projections showing PCE inflation at 3.0% and core PCE at 3.1% for the year. Meanwhile, the stock market showed strong gains in Q2, particularly in technology and growth sectors, suggesting cautious investor confidence in a soft landing scenario.
Access to Capital and Lending Environment
Interest rates remain elevated compared to pre-pandemic levels, but access to capital is gradually improving for well-qualified borrowers. Programs such as the SBA 504 loan continue to support small businesses, particularly those looking to purchase or improve commercial real estate, by offering long-term, fixed-rate financing for major fixed assets like buildings, construction, and heavy equipment.
In addition to acquisition and expansion, the 504 loan program also allows business owners to refinance existing commercial real estate debt, especially loans with upcoming balloon payments or high interest rates. The ability to refinance into a low, fixed-rate loan provides long-term stability and can help business owners avoid disruptive cost increases.
Refinancing to a lower rate while accessing equity is, in many cases, a powerful form of capital access for growing businesses.
Preparing for Small Business Success in 2025
As 2025 continues, small business owners are monitoring inflation, labor conditions, and local consumer demand. While national data provides helpful benchmarks, key decisions will depend on individual market conditions and industry trends.
AmPac remains committed to supporting small businesses across California, Arizona, and Nevada with flexible loan programs and personalized guidance. Whether you’re investing in property, expanding operations, or improving stability, our team is here to help you navigate the path forward.