Despite a sharp retreat in national economic optimism, mid‑market companies in the U.S.—those generating annual revenues between $20 million and $500 million—are steadfastly focused on growth. Confidence in the broader U.S. economy has fallen dramatically, with optimism dropping from 65 percent six months earlier to just 32 percent. Yet 58 percent of executives in this segment remain optimistic about their own company’s performance, and 78 percent expect their revenue or sales to remain flat or increase. Similarly, 72 percent anticipate stable or rising profits.
Even amid this uncertainty, more than half of these firms plan ambitious growth strategies. Many intend to launch new products or innovate within their offerings, while others are targeting strategic investments in areas such as digital transformation, AI, cybersecurity, or automation. A significant number are exploring expansion into new domestic markets as part of their resilience strategy.
Labor market challenges and rising operational costs continue to be top concerns. Workforce recruitment and retention remain pressing issues, with many leaders reporting persistent staffing shortages and elevated labor costs. A large portion of firms identify these workforce issues as a high priority and expect them to impact growth over the next several years. Despite these challenges, executives are investing in employee development, automation, and operational efficiency programs to remain agile.
Supply chain pressures—including tariffs, material shortages, delivery delays, and rising import costs—are prompting companies to rethink procurement strategies. Many goods-producing firms anticipate continued delays and higher raw material costs. These disruptions have led companies to diversify suppliers and enhance inventory planning. Some firms have adjusted pricing models or postponed product launches in response to these external pressures. A smaller share has been forced to cancel development plans altogether.
Rather than retreat, many leaders are doubling down on disciplined execution. They are transforming uncertainty into competitive advantage by improving productivity, leveraging strategic pricing, and optimizing digital tools. This approach reflects a broader optimism about the ability to maintain performance even in volatile conditions.
Capital strategy is cautious but growth-oriented. While many plan to maintain their current capital levels, a sizable portion intends to raise equity or increase debt to support expansion efforts. Preferred funding sources include private equity, commercial lenders, and venture capital, all of which play a key role in supporting strategic investments.
Hiring remains active, with over half of firms expecting to increase headcount in 2025. Only a small percentage plan workforce reductions. Most firms believe they are in a stronger financial position compared to the previous year, despite persistent concerns around labor shortages, tariffs, and economic policy uncertainty.
Technology investment continues to serve both defensive and strategic purposes. Companies are accelerating adoption of AI, advanced analytics, and automation to streamline operations and protect margins. Many plan to boost tech investment in the coming year to enhance efficiency, decision-making, cybersecurity, and forecasting. In supply chain management, AI tools are increasingly used to optimize sourcing and reduce costs.
Overall economic sentiment among middle‑market businesses remains cautious but hopeful. While indexes tracking this sector have shown signs of softening, they still indicate activity above recession thresholds. Fewer companies are increasing capital spending, and some report declines in revenue or earnings. Nonetheless, many remain focused on executing well within their control, adjusting quickly to changing circumstances.
U.S. middle‑market firms continue to outperform their global peers in profitability expectations. A large majority anticipate higher profits over the next 12 months—surpassing comparable businesses in other regions. This highlights their resilience and ability to adapt in uncertain times.
These businesses are moving forward with new product rollouts, capital investments, and efficiency enhancements while actively managing workforce and supply chain challenges. Their pragmatic optimism, focus on controllable factors, and disciplined strategies are positioning them to weather broader economic headwinds and continue their trajectory of growth.
