Optimism about the US economy has beentempered at America's midsize businesses.
According a new JPMorgan Chase surveyreleased 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 ofcommercial banking, called this outlook "cautious optimism."
"I think people feel good aboutunderlying economic conditions," Smith said in an interview.
"I say cautious just because obviouslythere 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 areoptimistic 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 hiringall 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 oftenserves 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.
These firms are also targeted as a steady,repeat source of business for US banks and, more recently, private creditfunds. Middle-market companies are also a core acquisition and exit pipelinefor the private equity industry and a source of business for M&A advisers.
That position helps explain why, aseconomic confidence appears to have dimmed, survey respondents showed higher conviction across the board for other growth strategies.
The appetite for making mergers andacquisitions part of their firm's 12-month growth plan rose to 39% for 2026 from 31% a year ago.
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And while one hallmark trait of last year'sdeals 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, andinvestors 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 midsizefirms 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 financialfirms largely played down those worries.
Smith said midsize firms are also entering2026 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 intime any massive deterioration in credit quality," Smith said. "And quite frankly, most companies' corporate balance sheets are quite healthy
headed into 2026."