- - America's midsize businesses express 'cautious optimism' for 2026 after exuberant 2025: JPMorgan survey

David HollerithJanuary 7, 2026 at 2:00 AM

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Optimism about the US economy has been tempered at America's midsize businesses.

According a new JPMorgan Chase survey released Wednesday, just 39% of leaders at midsize US firms said they are optimistic about the national economy in 2026. That's down sharply from 65% a year earlier, when sentiment for the US economy stood at a five-year high.

Melissa Smith, JPMorgan Chase's head of commercial banking, called this outlook "cautious optimism."

"I think people feel good about underlying economic conditions," Smith said in an interview.

"I say cautious just because obviously there continues to be a lot of geopolitical uncertainty, which I think is weighing on people's minds," she added.

Looking at their own firms, however, confidence is higher among the more than 1,400 leaders who responded to the survey.

Just over half (51%) said they are optimistic about industry performance, down from 60% a year ago. Meanwhile, some 71% of executives have confidence in their own firms' outlook for 2026, roughly unchanged from last year's reading of 74%.

Expectations on sales, earnings, and hiring all softened, but not materially. Roughly three-quarters, or 73% of survey respondents expect to increase revenue in 2026, while 64% project higher profits and 48% plan to expand their workforce. That compares to 74% of last year's respondents anticipating increased revenues, 65% projecting higher profits, and 51% planning to expand their workforce.

Sentiment among midsize US firms often serves as important economic bellwether. That's because the so-called middle market, defined by JPMorgan as representing all US businesses with between $20 million and $500 million in annual revenue, accounts for roughly a third of all US private-sector revenue and employment, according to the bank.

Exterior view of the JPMorgan Chase global headquarters building at 270 Park Ave. on Nov. 13, 2025, in New York City. (Angela Weiss/AFP via Getty Images) (ANGELA WEISS via Getty Images)

These firms are also targeted as a steady, repeat source of business for US banks and, more recently, private credit funds. Middle-market companies are also a core acquisition and exit pipeline for the private equity industry and a source of business for M&A advisers.

That position helps explain why, as economic confidence appears to have dimmed, survey respondents showed higher conviction across the board for other growth strategies.

The appetite for making mergers and acquisitions part of their firm's 12-month growth plan rose to 39% for 2026 from 31% a year ago.

And while one hallmark trait of last year's deals market was a ramp up in megadeals over $10 billion, M&A bankers and the private equity industry alike are hoping to see more of a rebound in smaller deals this year.

"We're seeing founders, leaders, and investors pursuing strategic partnerships, exploring M&A, and thinking creatively about how to position their companies for the future," JPMorgan's Smith said.

Worry over credit conditions among midsize firms kicked into higher gear in the second half of last year, most notably with the collapse of subprime auto lender Tricolor, to which JPMorgan had $170 million of exposure through wholesale lending.

Through the end of the fourth quarter, US banks and other financial firms largely played down those worries.

Smith said midsize firms are also entering 2026 with balance sheets in relatively good shape. Combine this with stated plans to keep hiring modest, and more companies should be in position to be attractive targets in the year ahead.

"We are not seeing at this point in time any massive deterioration in credit quality," Smith said. "And quite frankly, most companies' corporate balance sheets are quite healthy headed into 2026."

David Hollerith covers the financial sector, ranging from the country's biggest banks to regional lenders, private equity firms, and the cryptocurrency space.

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Source: “AOL Money”