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 holding steady at 56.8 (down 0.1) with revenue conditions weakening modestly to 42.5 from 42.7. Cost pressures remain severely elevated with input prices at 70.3 (up 1.6 points)—well above the neutral 50 level—indicating businesses continue facing substantial cost headwinds. Importantly, output prices rose to 56.6 (up 1.1 points), signaling that businesses are increasingly passing these cost pressures through to consumers, contributing to consumer-side inflationary pressures.
Critical Insight: Input price pressures remain severely elevated at 70.3, far above the neutral 50 level, indicating that businesses continue to face substantial cost headwinds with little relief. The concerning development is that output prices have risen to 56.6 (up 1.1 points), suggesting businesses are increasingly successful at passing cost increases through to consumers. This output price acceleration indicates growing consumer-facing inflationary pressures, while the 13.7-point gap between input and output prices still represents significant margin compression challenges.
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.
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: 56.8 (Well above 50 = Strong positive sentiment)
35.5% rate performance as above average or excellent vs 19.1% 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 (15.3% increased - 30.4% decreased). Revenue conditions remain challenging with twice as many businesses reporting decreases versus increases.
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: 47.9 (Below 50 indicates net job losses)
Hours Index: 46.4 (Decline from 46.8, remaining below 50)
Survey asks: "Did this business have any paid employees who worked from home for at least one workday?"
Employment conditions continue to show net contraction with 5.4% of businesses increasing employees vs 9.6% decreasing, a net negative of 4.2 percentage points. Hours worked deteriorated with the index declining to 46.4 from 46.8, indicating businesses are further reducing work hours. Nearly twice as many businesses decreased hours (15.2%) compared to those that increased hours (7.9%). Work from home adoption remains stable at roughly 28.5%. Overall, labor market indicators suggest persistent softening in employment conditions.
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: +3.8% (slight increase in delays)
Options: Larger than optimal, Optimal, Smaller than optimal, Not applicable
Values above 50 indicate longer delivery times on average. Uptick suggests modest deterioration in supply chain conditions.
Values above 50 indicate net lengthening of delivery times
Supply chains show slight deterioration with delivery time index rising to 53.0 from 52.6. This modest increase indicates continued challenges with delivery times trending longer rather than shorter. Inventory management shows persistent imbalances, with 12.7% reporting inventories as "too low" compared to 3.2% "too high," while 30.9% report optimal levels. The four-to-one ratio of too-low vs too-high inventories suggests ongoing supply chain stress.
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 remain severely elevated with the input price index at 70.3—far above the neutral 50 level, with 42.0% of businesses reporting increased input costs versus only 1.5% reporting decreases. The key development is output prices rising to 56.6 (up 1.1 points), indicating businesses are increasingly passing cost increases through to consumers, contributing to consumer-side inflation. The gap between input and output price pressures remains substantial at 13.7 points, indicating ongoing margin compression challenges despite improved pass-through capabilities.
Net cost increase: +40.5% (42.0% - 1.5%)
Net price increase: +13.2% (17.0% - 3.8%)
Input costs remain severely elevated while output prices rose, indicating businesses passing costs to consumers
Difference between businesses raising input vs output prices (42.0% - 17.0%). While the gap remains substantial, businesses show improved ability to pass costs to consumers.
Net output price change (17.0% increased - 3.8% decreased). Businesses are raising prices but struggling to keep pace with input cost inflation.
Input costs at 70.3 remain far above neutral levels, creating persistent margin pressure despite businesses' improved ability to pass costs through to consumers via higher output prices.
Survey Questions: Business owners are asked about their expectations six months from now (around February 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 February 2026) remain cautiously optimistic despite near-term challenges. Businesses expect modest improvement in performance (55.6) but this still lags current conditions (56.8). Employment expectations (50.8) show slight optimism above neutral. However, businesses anticipate continued severe cost pressures, suggesting they view current input price increases as persistent rather than transitory. Future demand expectations (51.6) indicate modest recovery hopes.
Businesses expect modest deterioration in performance
Modest employment recovery expected
Significant demand recovery anticipated
Businesses expect cost pressures to intensify further
Radar chart comparing current conditions (blue) with 6-month expectations (pink). Values above 50 indicate positive sentiment.
Mixed expectations with cost concern dominance: While businesses anticipate modest demand recovery (+7.8 points to 51.6) and employment improvements (+2.9 points to 50.8), they expect performance to deteriorate slightly (-1.2 points to 55.6). Most concerning is the expectation of even more severe cost pressures, with future input prices expected to reach 75.9 (+5.6 points), suggesting businesses view the current cost inflation as the beginning of a sustained trend rather than a temporary spike.
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 (25.8%), inability to invest (9.6%), refinancing issues (4.8%)
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 and weather remain key external pressures with 25.8% of businesses reporting negative interest rate impacts over the last 6 months, primarily through decreased profitability. Weather events affected 7.2% of businesses, up from previous periods, with severe storms/hail (24.3%), floods (20.4%), and high winds (16.7%) being the most common causes. AI adoption remains modest at 9.7%, suggesting significant untapped productivity potential across the economy.
Bi-weekly econometric analysis of the Census Bureau's Business Trends and Outlook Survey. Rigorous analysis, accessible insights, zero partisan spin.