Bi-weekly Deep Dive: Census Bureau BTOS Economic Intelligence
Translating complex business sentiment data into clear insights about where the American economy is heading—no partisan spin, just empirical analysis.
Key Finding: The latest BTOS data shows business performance moderating slightly to 56.1 (down 0.4) from the summer surge highs, suggesting the performance gains are stabilizing rather than continuing to accelerate. Revenue conditions deteriorated to 41.1 (down 1.0), falling back into the challenging sub-42 range that dominated most of 2025. Cost pressures intensified further with input prices rising to 70.0 (up 0.7 from 69.3), reaching the highest level since mid-August and representing the continued severe cost environment that has characterized all of 2025. Output prices increased modestly to 56.0, but the gap between input costs and output prices remains substantial at 14 points, indicating persistent margin compression pressures.
Key 2025 Development: After the dramatic summer performance surge that lifted business performance from the low-50s range to nearly 57 in mid-July, the current reading of 56.1 suggests this improvement is stabilizing rather than accelerating further. Revenue conditions at 41.1 have returned to the more challenging levels seen earlier in 2025. Most concerning is the intensification of cost pressures, with input prices at 70.0 representing the highest level in recent periods and continuing the severe 62-70 range that has persisted throughout 2025. The combination of moderating performance and rising costs creates a more complex economic picture as the year progresses.
BTOS Index Methodology: Values above 50 indicate net positive sentiment (more increases than decreases), while values below 50 indicate net negative sentiment. The indices are calculated from business owner responses about changes in their operations over the past two weeks compared to the prior two-week period. Our analysis synthesizes ~1.2M business responses into actionable economic intelligence covering all 19 bi-weekly periods in 2025.
Survey Question: "Overall, how would you describe this business's current performance?" Business owners rate their company on a 5-point scale from Excellent to Poor. Additionally, they report how their operating revenues/sales/receipts and demand changed in the last two weeks compared to the previous two-week period.
Performance Index: 56.1 (Well above 50 = Strong positive sentiment)
34.6% rate performance as above average or excellent vs 19.6% below average or poor
Survey asks: "How did this business's operating revenues/sales/receipts change in the last two weeks?"
Survey asks: "How did demand for this business's goods or services change in the last two weeks?"
Net revenue change (13.4% increased - 31.1% decreased). Revenue conditions have deteriorated back to the challenging levels that characterized early 2025, with current conditions falling below the 42+ range seen in recent periods.
Survey Questions: Business owners report changes in their number of paid employees and total hours worked in the last two weeks. They also indicate whether any employees worked from home for at least one workday (6+ hours). These metrics provide real-time labor market conditions.
Employment Index: 47.3 (Below 50 indicates net job losses)
Hours Index: 45.2 (Decline from 46.1, well below neutral)
Survey asks: "Did this business have any paid employees who worked from home for at least one workday?"
Labor market conditions show further deterioration with employment at 47.3 (down 0.5) and hours worked declining to 45.2 (down 0.9), representing some of the weakest readings in recent periods. The employment index of 47.3 indicates 4.7% of businesses increased employees vs 9.4% decreasing, continuing the persistent below-neutral pattern that has characterized all of 2025. The decline in hours worked to 45.2 is particularly notable as it approaches the weaker levels seen earlier in the year. Work from home adoption remains steady at 28.0%. The labor market data suggests a softening trend that aligns with the broader moderation in business performance from summer highs.
Survey Questions: "How did the time it takes for this business to receive deliveries from suppliers change in the last two weeks?" and "How would you describe this business's current inventories?" These track supply chain efficiency and inventory management decisions in real-time.
Net change: +3.0% (modest increase in delays)
Options: Larger than optimal, Optimal, Smaller than optimal, Not applicable
Values above 50 indicate longer delivery times on average. Increase suggests modest deterioration in supply chain conditions.
Values above 50 indicate net lengthening of delivery times
Supply chain conditions remain within the elevated delivery time range that has characterized 2025, with the index increasing to 53.0 from 52.7, indicating modest deterioration. This continues the pattern of above-neutral delivery pressures throughout the year. Inventory management shows persistent imbalances, with 13.3% reporting inventories as "too low" compared to 3.2% "too high," while 30.3% report optimal levels. The four-to-one ratio of too-low vs too-high inventories remains consistent with the ongoing supply chain challenges that have been a defining feature of the 2025 economic environment.
Survey Questions: "How did the prices this business pays for goods or services change in the last two weeks?" (input costs) and "How did the prices this business charges for its own goods or services change in the last two weeks?" (output prices). These track inflation pressures from both cost and revenue perspectives.
Cost pressures have intensified to their highest levels in recent periods with the input price index rising to 70.0 (up 0.7 from 69.3), representing a significant escalation in the already severe cost environment that has persisted throughout 2025. 40.5% of businesses reported increased input costs versus only 1.0% reporting decreases in the current period. This 70.0 reading matches some of the highest cost pressure levels seen all year. The 14.0-point gap between input costs (70.0) and output prices (56.0) represents one of the largest gaps in recent periods, highlighting the intensifying margin compression challenges as businesses struggle increasingly to pass through the rising costs to consumers.
Net cost increase: +39.5% (40.5% - 1.0%)
Net price increase: +12.0% (15.5% - 3.5%)
Full-year trend shows sustained input cost elevation (62-70 range) with persistent gaps between what businesses pay versus what they can charge consumers
Difference between businesses raising input vs output prices (40.5% - 15.5%). The gap has widened significantly from the previous period.
Net output price change (15.5% increased - 3.5% decreased). Businesses continue raising prices but struggle to keep pace with accelerating input cost inflation.
Input costs at 70.0 represent the intensification of the severe cost environment, creating the largest margin compression pressures seen in recent periods as the gap with output prices widens.
Survey Questions: Business owners are asked about their expectations six months from now (around March 2026) across multiple areas: performance, employment levels, hours worked, delivery times, inventory levels, demand, and pricing. These forward-looking indicators help predict economic trends.
Business expectations for the next six months (through March 2026) show increasingly cautious sentiment despite current performance levels remaining above neutral. Businesses expect further moderation in performance (54.7 vs current 56.1), suggesting they view the summer surge as having peaked. Employment expectations (51.0) remain slightly above neutral but unchanged from previous expectations. Most concerning is that businesses continue to anticipate extremely severe future cost pressures, with input prices expected to reach unprecedented levels. Future demand expectations (51.8) indicate very modest recovery hopes, but overall sentiment suggests businesses view current challenges as persistent and potentially intensifying rather than temporary.
Businesses expect continued moderation in performance
Modest employment recovery expected
Significant demand recovery anticipated
Businesses expect cost pressures to reach unprecedented levels
Radar chart comparing current conditions (blue) with 6-month expectations (pink). Values above 50 indicate positive sentiment.
Cautious expectations amid rising cost pressures: While businesses anticipate modest demand recovery (+9.1 points to 51.8) and employment improvements (+3.7 points to 51.0), they expect performance to continue moderating (-1.4 points to 54.7) from current levels, suggesting the summer performance surge is viewed as having peaked. Most concerning is the expectation of extreme future cost pressures, with businesses anticipating input price inflation to reach levels that could be unprecedented, well beyond the already severe 70.0 current reading, suggesting businesses view cost inflation as entering a new, more intense phase rather than moderating.
Survey Questions: Businesses report on external factors affecting their operations including: "In what ways did changes to interest rates negatively impact this business?" (last 6 months), "Did this business experience monetary losses due to extreme weather events?" (last 6 months), and other external economic pressures affecting business operations.
Specific impacts include: Decreased profitability (26.1%), inability to invest (9.6%), refinancing issues (4.9%)
Weather types: Hurricane, flood, drought, heat wave, wildfire, winter storm, tornado, other
Includes machine learning, natural language processing, virtual agents, voice recognition
Percentage of businesses affected by each external factor
Interest rates remain a significant external pressure with 26.1% of businesses reporting negative impacts over the last 6 months, consistent with previous periods, primarily through decreased profitability. Weather events affected 7.6% of businesses, down slightly from previous periods but maintaining ongoing vulnerability to climate impacts. AI adoption continued its gradual increase to 14.1%, up from previous measurements, suggesting steady technology adoption among businesses though significant untapped potential remains. The consistency of these external factors indicates they remain persistent rather than acute challenges for the business community.
Bi-weekly econometric analysis of the Census Bureau's Business Trends and Outlook Survey. Rigorous analysis, accessible insights, zero partisan spin.