From good to gloom. Main Street is bracing for a slowdown. 

By almost every metric that matters, the U.S. economy has delivered in the first six months of 2025. Unemployment stayed low, consumers kept spending, and inflation retreated. 

Despite this encouraging performance, the economic outlook has dimmed. When Federal Reserve policymakers met last week to decide whether to cut interest rates, their individual forecasts combined painted a cautious picture. The central bank’s latest projections show slowing economic growth, rising unemployment, and accelerating inflation.  

The Fed isn’t alone in its pessimism. The Survey of Professional Forecasters conducted by the Federal Reserve Bank of Philadelphia also had a more downbeat assessment of the economy in the second quarter than it did just three months earlier.  

Economists and policymakers always have their take on the economy. But how is Main Street feeling about the second half of 2025?  

To answer that, we turn to the Business Trends and Outlook Survey from the U.S. Census Bureau. This survey provides a twice-monthly snapshot of business sentiment across the country, based on a survey of some 1.2 million employers. And it shows that even as the economy is holding up, business optimism isn’t.  

On growth 

In March, 30 percent of Census survey respondents predicted that they’d be describing their businesses as either excellent or above average in the next six months.  In June, only 28 percent of business owners had this upbeat outlook.  

Also in March, 24 percent of survey respondents said they expected demand for their product or service to increase in the next six months; 17 percent expected demand to decrease. By June, that gap had disappeared, with businesses evenly divided at 19 percent on whether demand would increase or decrease.  

On employment 

In March, 14 percent of employers expected to grow their headcount over the next six months. In June, that share fell to 12 percent. 

More companies also are anticipating cuts to employee hours. In June, 13 percent of employers said they’re prepared to cut hours, up from 12 percent in March.  

Only 12 percent expect to increase employee hours, down from 17 percent in March. 

On inflation 

One thing that has improved since March is the businesses outlook on inflation. In June, 31 percent of survey respondents said they expected to charge higher prices in the next six months, down from 32 percent in March. 

Fifty-one percent expected to pay more for their own goods and services in the next six months, down from 52 percent in March. 

It’s worth noting that a year ago, in June 2024, fewer than half of businesses surveyed—48 percent—expected the cost of their goods and services to go up. And only 28 percent expected to raise prices. 

My take 

For a reliable read on the economy, it’s always good to take the pulse of employers, especially small business owners who see the world changing in real time. And Main Street has a bad feeling about things. Businesses are bracing for slower growth and slower employment.  

Is the Census Bureau’s improvised crew of 1.2 million forecasters right? Given domestic policy upheaval and the uncertain global backdrop for economic activity, real-time data on what businesses think and expect is an important complement to economist forecasts.   

The week ahead 

Monday: As a Hoosier, I’m still reeling over the Pacers’ game-seven loss. But while basketball season is over, homebuying season remains in full swing, and so far, not so good. Existing home sales fell 0.7 percent year over year last month, giving us the worst May for sales since 2009, when the housing collapse was in full swing.  

Tuesday: In March, the pace of house price appreciation slowed to its lowest level in two years, according the S&P CoreLogic Case Shiller Home Price Index. On Tuesday, we’ll see if price growth continued to slip in April. If so, it could mean even more cooling in shelter costs, which have been a consistent contributor to inflation. 

Wednesday: The housing industry is hopeful that a combination of more inventory and slightly lower mortgage rates will be good for sales. We’ll get new residential sales for May from the Census Bureau. 

Thursday: Durable goods hit a soft patch in April after four months of solid growth. When the Census Bureau releases May numbers today,  I’ll be looking to see if April was a temporary slowdown or the beginning of a trend.  

The Bureau of Economic Analysis will release its final revision to first-quarter GDP.  

Given the downbeat sentiment for employment from businesses, I’ll be keeping a careful eye on whether initial and continuing jobless claims reported by the Department of Labor continue to inch higher. 

Friday: This week’s closer is a big one. The Personal Consumption Expenditures Price Index from BEA is the Fed’s most-watched measure of inflation. The number we get today could help determine whose outlook is likely to materialize in the next six months: economists, who expect inflation to accelerate, or business owners who think it will slow.