Half of the country’s small business owners expect their revenue to rise over the next three months — the highest reading this year — even as their confidence in the broader economy collapsed to 24%, according to the Q3 Business Pulse survey released June 30 by Citizens Financial Group. Three months earlier, 36% said they were extremely or very confident in the U.S. economy.

Read those two numbers together and they look like a contradiction. They aren’t. They are two different questions, and owners are answering the one they can actually see.

Mark Valentino, head of business banking at Citizens, framed it plainly: “Small business owners are proving they can hold their own,” he said, arguing the split points to opportunity for operators willing to stay nimble rather than wait for conditions to improve.

What owners are actually worried about

Cost is the answer, and it isn’t close. 51% of owners named rising costs and inflation as their biggest challenge, ahead of economic uncertainty at 43% and finding and keeping customers at 39%.

The timing matters. The survey ran from June 1 to June 18 — squarely inside a stretch when energy prices were driving inflation and the war with Iran was reshaping fuel costs. For a business owner in Passaic or New Rochelle, “the economy” is a headline. The electric bill is a number on a desk. That gap is what the survey is measuring.

Citizens polled 500 business principals — owners, founders, partners, chief executives and presidents — and weighted results by company size to reflect the national small business population. The quarterly survey tracks near-term expectations for revenue, hiring, spending, credit usage and business challenges. It replaced the bank’s former Business Conditions Index, which drew on the bank’s own internal data rather than asking owners directly.

Hiring and borrowing plans held steady. Owners are not retrenching. They are also not surging.

How this reads against six months ago

The Q1 survey, conducted back in November 2025, was considerably more bullish. Then, 64% of smaller companies with revenue between $500,000 and $4.9 million expected revenue growth in the coming quarter, and 86% of middle-market firms above $5 million said the same. 68% of middle-market companies said they were confident in the economy. 41% planned to add headcount, and fewer than 3% planned to cut full-time staff.

Half the small business field expecting growth now is an improvement over the rest of 2026 — but the confidence figure has been moving the other way all year. Owners have downgraded their view of the country while upgrading their view of themselves.

The tri-state overlay

Nothing in the survey is specific to New York, New Jersey or Connecticut, but the cost pressure it identifies lands hardest here.

New York City inflation ran 5.1% in May against 4.2% nationally, with energy prices the primary driver, according to the Office of the New York City Comptroller. New York State electricity prices are the sixth highest in the country. Con Edison delivery rates rise again in 2027 and 2028 under the schedule approved by the Public Service Commission.

New Jersey has its own version. The New Jersey Chamber of Commerce said the state slipped from 30th to 31st in this year’s CNBC business rankings, with New York, Pennsylvania and Connecticut all placing ahead of it. NJBIA President and CEO Michele Siekerka has argued the state’s core problem is not any single cost but the absence of predictability — owners cannot plan when the rules keep moving.

Trenton is nibbling at the edges. Business formation fees dropped $25 on July 1 under P.L.2026, c.24, cutting the cost of filing a Certificate of Incorporation from $125 to $100. That is real money to nobody, and the state itself pegs the revenue loss at $4.1 million. It is a gesture, not a fix.

What to do with this

For a bank with $227.9 billion in assets and roughly 1,000 branches across 14 states, this survey is a lending signal: demand for credit is stable, appetite for expansion is real, and the constraint is margin, not confidence.

For an owner in the tri-state area, the useful takeaway is narrower. The businesses reporting growth are not the ones who correctly predicted the economy. They are the ones who stopped trying to, and went to work on the costs sitting in front of them.

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