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Economic and policy uncertainty continue to define the business landscape for America’s middle market. Despite optimism around upcoming tax cuts, new data from the Q3 2025 RSM US Middle Market Business Index (MMBI)—fielded by The Harris Poll—shows that business confidence remains tempered heading into the critical holiday season.
The index, which measures the economic outlook of middle market executives, fell modestly to 122.5 in Q3 from 124.2 in Q2, reflecting persistent pressures from trade policy, rising input costs, and uneven consumer demand.
Tight Margins and Inflation Pressures
According to the survey of 404 senior executives, two-thirds reported higher prices paid for goods and services this quarter, and the same share expect costs to rise further into 2026. While 62% plan to raise their own prices, only 48% said they successfully increased prices this quarter, suggesting that many firms are absorbing inflation rather than passing it through.
These findings point to narrowing profit margins across the middle market. With the average U.S. tariff rate approaching 10%, up sharply from the 25-year average of 1.4%, companies face continued cost strain. RSM projects the rate could reach 18% in the months ahead, amplifying concerns over supply chains, inventory, and holiday season pricing.
Balancing Growth with Caution
While executives remain cautious, there are signs of resilience. Half of middle market leaders expect the economy to improve over the next six months, buoyed by expectations of pro-growth tax policy. A majority also anticipate increases in both revenues (58%) and net earnings (60%) during that same period.
Hiring and capital expenditures have slowed but not stopped. Just over one-third of respondents said they increased hiring in Q3, and 38% increased spending on productivity-enhancing tools. Looking ahead, 46% plan to hire and 50% expect to expand investment within six months; evidence that the middle market continues to adapt strategically amid volatility.
The Bigger Picture
For many executives, the interplay between tariffs, costs, and policy uncertainty remains the central challenge. As Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce, notes: “The benefits from the recent tax bill—greater certainty and reduced after-tax costs of capital investments—are being eroded by tariffs and policy uncertainty.”
The message is clear: restoring confidence will depend on reducing trade barriers, regulatory burdens, and persistent labor constraints so that middle market firms can fully capitalize on pro-growth momentum in 2026.
About the research
The RSM US Middle Market Business Index is a measure of business sentiment among middle market firms, conducted quarterly by The Harris Poll on behalf of RSM in partnership with the U.S. Chamber of Commerce. The Q3 2025 findings are based on a survey of 404 senior executives conducted from July 14 to August 4, 2025.
Explore the full findings and learn more about the MMBI at RSM’s website.
