The stock market is near record highs. Big banks are posting record trading revenue, tech giants are guiding higher on AI demand, and retail giants are buying back their own stock at record clips.
Small businesses, meanwhile, just logged their worst stretch of confidence in over a year.
At the start of 2026, small business owners had real reasons to feel good. Inflation was cooling, borrowing costs were coming down, and tax breaks were finally showing up.
Even Trump's on-again, off-again tariff moves were starting to feel predictable, giving owners enough clarity to plan ahead.
Then the war with Iran kicked off. Fuel costs jumped, raw materials got pricier, and inflation pushed back up across most goods.
The rate cuts traders were counting on are now in doubt, with freight costs and shipping insurance climbing alongside oil prices across the Gulf.
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The National Federation of Independent Business said its May reading of economic expectations among small firms was the weakest since Trump won his second term. Hiring plans, investment plans, and sales outlook all pulled lower in the same report.
Bank of America Institute data showed small business profits grew at their slowest pace in two years in April, with job openings at small companies going flat at the same time.
Bruce Jovaag, who runs a home remodeling shop in Fenton, Missouri, told the Times keeping his doors open has been a fight unlike anything he's seen before.
Why the gap? Big companies have buffers small firms simply don't:
Small firms have none of that, so they cut back with hiring freezes, paused expansion plans, and the same defensive playbook they pulled out during past rough patches.
Local lending tightens alongside the spending pullback, leaving fewer options to bridge cash flow gaps.
Trump and Iranian officials announced a preliminary deal to end the war on Sunday. If it holds, fuel prices could ease - though the damage to small business balance sheets won't reverse overnight.
The bigger question for investors: how long can the gap between big and small business stay this wide?
Small firms employ nearly half the country's workforce, which means when they stop hiring, the labor market eventually feels it. Consumer spending follows soon after, because workers without raises don't spend like workers with them.
When that catches up to the rest of the economy, the two stories become one.
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