Business Outlook Survey Q1 2025

Survey respondents more optimistic about their own business than about the U.S. economy, see rising wages and prices ahead

Quarterly Market Report Q1 2025

Last quarter

Looking back at the previous quarter, survey respondents were evenly split on whether the U.S. economy had grown or contracted, which matches up with the nearly flat GDP growth number for the first quarter. This was a similar finding compared to our survey last quarter.

While they were divided on the U.S. economy, more of them reported an increase in activity for their own businesses with a diffusion index of 15. About a quarter of respondents increased their number of employees, and 19% reported increased average work hours. These results were also similar to last quarter's survey with one exception: none of this quarter's respondents reported a decrease in average work hours compared to 14% reporting decreased average work hours in the previous survey.

Wage and price pressures were once again evident with 50% reporting higher wages and 46% reporting higher prices for their own goods or services.

Because the survey respondents change from one quarter to the next, any analysis of the results over time must be interpreted with caution. This survey is a snapshot of this particular sample of businesses at this time. However, we do notice a good deal of consistency from one quarter to the next as well as general agreement between this quarter's look back and the previous quarter's look ahead.

Looking ahead

Respondents were slightly more positive about the next six months, both in terms of their assessment of the U.S. economy and their own business.

For the most part, survey participants see the next six months playing out much as the last quarter did. Wages and prices are still expected to increase going forward. The only substantive change between this survey and the one conduced the previous quarter is that a smaller percentage of businesses are expecting to increase their capital expenditures compared to our last survey, although the diffusion index is still quite high at 24.

Special focus

This quarter's special focus question was on the most pressing economic concerns respondents have at this time.

Asking for the top two concerns can be helpful in identifying secondary issues that are not at the top of many people's list of concerns while still being important. It can also reveal issues that are at or near the top for many people.

Inflation and availability of labor were the most common issues at the very top of people's lists. However, tariff costs did bring in a significant number of people who ranked it second on their list. So while tariffs are not the top concern of very may business leaders, they are still on the minds of many.

Also, we note that availability of labor was listed as first or second by over half of respondents, suggesting that this continues to be a very critical issue.

About the survey

Beginning with the 2023 Q3 Quarterly Market Report, the Chamber began a survey of local businesses to gauge the state of the Quad Cities economy. This survey is similar to surveys conducted by groups around the country, in that it asks some basic questions about the respondent’s assessment of economic activity, wages, hiring, capital expenditures and a few other indicators. The options for each question are “increasing,” “decreasing” or “no change.” A “diffusion index” is calculated for each question, which is simply the difference in percentage points between “increasing” and “decreasing.” This diffusion index captures the degree to which respondents as a group feel that a certain aspect of the business climate is changing in one direction or the other.

The responses this quarter are a representative mix of companies from the region with 12% manufacturing, 27% retail, 52% service providers and 9% other. (In some lines of the tables, percentages may not total 100 due to rounding.)

This survey is a regular feature in the Quarterly Market Report, and we invite our members and other local businesses to watch for the survey invitation next quarter.

As the difference in responses between manufacturing and non-manufacturing companies was not significant, only the overall results were reported this quarter.