Provident Bank survey signals shift from caution to expansion

After a year marked by hesitation, U.S. business owners are moving decisively from caution to action, according to the results of Provident Bank's 2026 Economic Outlook Survey, released Jan. 6, 2026. The findings suggest that the prolonged "wait and see" mindset that characterized much of 2025 has given way to renewed investment, hiring and technology adoption.

The shift reflects growing confidence that businesses can navigate persistent inflation and policy uncertainty, even as macroeconomic signals remain mixed. More than half of survey respondents said they expect the U.S. economy to be in better shape in 2026, while more than 60 percent believe their own businesses will improve this year.

"This year's data shows a clear transition from the passive optimism we saw last year to active investment this year," said Anthony Labozzetta, president and CEO of Provident Bank. "Business owners are no longer just hopeful about the future; they are funding it."

Much of 2025 was defined by strategic restraint. Elevated interest rates, uneven inflation progress, geopolitical tensions and uncertainty surrounding trade policy led many businesses to delay major commitments. Rather than retrench, however, companies largely focused on preserving cash, stabilizing operations and evaluating longer-term options. That pause now appears to be ending.

Preparing for growth

According to the survey, 70 percent of businesses plan to increase capital expenditures in 2026, up from 68 percent a year earlier. Notably, the share of respondents planning a significant increase in spending jumped to 19 percent, from 11 percent in 2025, signaling stronger conviction behind expansion plans.

Hiring expectations also strengthened. Fifty-seven percent of businesses expect to add staff this year, compared with 53 percent last year. The portion planning substantial hiring more than doubled, rising from 8 percent to 17 percent. The data suggests companies are no longer simply backfilling roles but preparing for growth.

Technology investment is emerging as a central theme of that expansion. Engagement with artificial intelligence surged, with 58 percent of respondents either already using AI or planning to adopt it in 2026, up sharply from 41 percent in the prior survey. For many businesses, AI is moving from experimentation into day-to-day operations, supporting efficiency, analytics and customer engagement.

The survey also revealed a pronounced generational divide in outlook and strategy. Forty-four percent of Gen Z business owners expect their companies to be in "much better shape" in 2026, compared with just 14.5 percent of baby boomers. Younger leaders are more likely to pursue aggressive expansion and to navigate global trade dynamics, while Gen X and boomer leaders are more focused on operational discipline and cost control.

Resilience and action despite uncertainty

Despite the optimism, challenges remain. Inflation continues to top the list of concerns, cited by 49 percent of respondents, though that figure is down from 60 percent last year. At the same time, anxiety over political and policy uncertainty has increased, with 37 percent identifying it as a key risk, up from 29 percent in 2025.

"Despite the headwinds of inflation and uncertainty, the dominant story for 2026 will be resilience and action," Labozzetta said. "Businesses are adapting, modernizing and expanding."

The survey was conducted by Pollfish on behalf of Provident Bank and reflects responses from 1,000 U.S. business owners and senior executives at companies generating more than $1 million in annual revenue. Provident Bank said it is positioning itself to support clients through capital planning, workforce expansion and technology modernization as businesses move from observation to execution in the year ahead.

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