Middle Market Economic Outlook

While still well above historical averages, year-over-year revenue and employment growth rates considerably slowed during the first half of 2025 and are at the lowest levels of the post-pandemic period (Q4 2021 – Q2 2025). Declining economic confidence-global economic confidence continues to ease while confidence in the national economy plummeted 11 points since the close of 2024, punctuated by a significant dip in national confidence, a reduction in expansionary activity, and an increase in the proportion of companies inclined to hold rather than invest cash, all signal a more conservative growth mindset among middle market leaders.

Executives point to rising costs, tariffs, and overall economic uncertainty as the most significant headwinds to growth going forward. Nevertheless, a majority of companies experienced revenue and employment growth over the past 12 months, and the majority say they will continue to experience growth in both areas over the next 12 months.

Further, four out of five companies continue to believe performance is better today compared to one year ago. As companies experience and assess the impacts of new policies and shifting economic conditions, they will remain laser-focused on growing revenues, increasing sales, and acquiring customers as the middle market continues to serve as the growth engine of the U.S. economy.

At the halfway point of 2025, the U.S. middle market continues to report robust, but weakening, growth numbers. Nearly four out of five companies say performance is improved compared to one year ago, and most companies report – and continue to project – growth. However, the rates of both year-over-year revenue and year-over-year employment growth have dropped notably for middle market companies across all revenue bands.

Expansionary activity, economic confidence, and investment appetites have dipped as well, with some of these metrics declining for the first time in several years. The primary issues behind the softening numbers include inflation and rising costs, the impact and potential impact of current and future tariffs and trade policies, and overall economic uncertainty that may be causing many middle market executives to adopt a “wait-and-see” mindset.

Growth Rates

Throughout the post-pandemic period (Q4 2021 – Q5 2025), middle market companies have reported an average year-over-year revenue growth rate of 12.4%. After rising steadily for many consecutive reporting periods, the rate of growth slipped below that average at the end of 2024. It has declined further over the past six months, but it remains in double digits at 10.7%, well above the overall average revenue growth rate of 7.5%. While 84% of companies report revenue growth, and just 7% of companies experienced revenue losses this reporting period, the proportion of companies experiencing double-digit year-over-year growth fell four percentage points, from 55% to 51%. Looking forward, increasing sales is a top strategic objective, but fewer businesses anticipate revenue growth over the next 12 months.

The rate of year-over-year employment growth fell even more sharply, from 10.3% recorded at the close of 2024 to 7.3% midway through 2025. As with revenue, the current growth rate is below the average employment growth rate for the post-pandemic period (10.1%) but above the overall average rate of 5.1%. The proportion of companies reporting employment growth declined this period as well, with the number of companies expanding the workforce by 10% or more falling notably from 44% to 36% over the past six months. Two out of five companies say the size of the workforce has stayed the same, while just 8% report workforce reductions.

As growth rates slow, middle market leaders signal more conservative attitudes toward reinvesting profits in their business, with more companies indicating a desire to hold onto their cash. Weakening economic confidence, particularly in the U.S. economy, may also be contributing to an apparent hesitancy to spend on growth. All types of expansionary activity have declined over the past 12 months, including new product introductions and expansion into new domestic markets.

Interest in mergers and acquisitions is reduced as well, with fewer middle market leaders expecting a transition in ownership over the next 24 months. Still, leaders say that growing revenues and increasing sales is their number one strategic objective and that customer acquisition is a leading area of focus and investment for their businesses. Indeed, nearly two-thirds of businesses anticipate year-over-year revenue growth into 2026, but at a slowing rate of 8.1%.

As companies look to realize their growth projections, they will contend with ongoing economic uncertainty as well as the impacts of inflation and new tariffs and trade policies. For nearly half of companies, the potential business impact of future changes in tariffs or trade policy presents a significant concern. Increased customer prices are the leading outcome of trade and tariffs, followed by reduced profit margins and increased input and material costs.

Key Challenges

• ECONOMIC & FINANCIAL CHALLENGES • Inflation, rising costs of materials, services, and inputs, and economic uncertainty
• WORKFORCE & TALENT CHALLENGES • Attracting and hiring qualified talent, rising labor costs, wage pressure, and compensation demands
• OPERATIONAL & TECHNOLOGY CHALLENGES • Data privacy and cybersecurity threats, maintaining operational efficiency
• MARKET & REGULATORY CHALLENGES • Impact of tariffs and trade policies, and competitive pressure

Download the report:  https://www.middlemarketcenter.org/Media/Documents/MiddleMarketIndicators/2025-Q2/FullReport/NCMM_MMI_MID-YEAR_2025.pdf

Press Release:  https://www.middlemarketcenter.org/mm_news/middle-market-growth-slows-as-uncertainty-mounts

Middle Market Indicator from the National Center for the Middle Market (NCMM)

THE MIDDLE MARKET INDICATOR (MMI) FROM THE NATIONAL CENTER FOR THE MIDDLE MARKET IS A BUSINESS PERFORMANCE UPDATE AND ECONOMIC OUTLOOK SURVEY CONDUCTED AMONG 1,000 C-SUITE EXECUTIVES OF COMPANIES WITH ANNUAL REVENUES BETWEEN $10 MILLION AND $1 BILLION. There are nearly 200,000 U.S. middle market businesses that represent one-third of private sector GDP, employing approximately 48 million people. These businesses outperformed through the last financial crisis (2007–2010) by adding 2.2 million jobs across major industry sectors and U.S. geographies, demonstrating their importance to the overall health of the U.S. economy.

They are private and public, family-owned and sole proprietorships; geographically diverse; and found across almost all industries. The health of these businesses and their respective outlook serve as a solid indicator for the greater U.S. economy as a whole. (See www.middlemarketcenter.org: “The Market That Moves America,” seminal research on the definition, significance, and role of the middle market, October 2011.)

How is the research conducted? The MMI surveys 1,000 CEOs, CFOs, and other C-suite executives of America’s middle market companies on key indicators of past and future performance in revenue, employment, and allocation of cash. The survey also reports middle market company confidence in the global, U.S., and local economies, and identifies key business challenge areas. The survey was designed to accurately reflect the nearly 200,000 U.S. businesses with revenues between $10 million and $1 billion, the lower and upper limits of middle market annual revenue. The survey is designed and managed by the National Center for the Middle Market. The most recent survey reflected in this report was fielded in June 2025.