What Four Bellwethers and a Small-Business Survey Are Saying About the Economy Right Now
Key Highlights
- Major corporations report strong demand and upward revisions in earnings guidance, indicating resilience in the face of recent economic shocks.
- But smaller companies are showing signs of weakening sales and reduced optimism, highlighting differing impacts across sectors.
- The overall economic picture remains positive, with indicators pointing to above 2.5% GDP growth in Q2, but small-business challenges could temper this optimism for 2027.
The first quarter has faded from the rearview mirror and Tax Day has come and gone. The initial shocks from the Iran war have passed and, gulp, it’s just about time to start thinking about planning and budgeting for 2027.
So just where do things stand with the U.S. economy?
To attempt to paint a concise picture answering that question, we’ve collected comments that executives at four companies with a deep view into economic activity — industrial goods distributor W.W. Grainger, trucking titan J.B. Hunt, rail giant CSX and aluminum manufacturer Alcoa — have made in the past week. To those comments, we appended some takeaways from the latest NFIB Small Business Optimism Index, which was released on May 12.
We’ve focused here on commentary about sales and left to the side observations and opinions about inflation, supply chains, labor shortages and other important elements. Our goal here was simple: What do these companies, both very large and small and also active in both the goods and services sectors, have to say about the possibility of demand destruction as we motor toward Memorial Day? Here’s what we found.
Grainger: Growing momentum and no pull-forward
Chairman and CEO D.G. Macpherson and CFO Dee Merriwether told investors and analysts that they’re raising Grainger’s earnings guidance for the year after a strong first quarter. A big driver: Rising activity from customers in the world of maintenance, repair and operations.
“We believe the MRO market demand gained momentum in the period. This view is supported by various market indicators as well as the activity we’re seeing on the ground with customers,” she said. “For Grainger specifically, we saw a broad-based acceleration across end markets with strong contributions from manufacturing, government and contractor customers […] We’ve continued our strong momentum into the second quarter with preliminary April sales up north of 13% on a daily, organic, constant-currency basis.”
Asked about the potential that some customers pulled forward activity in March and April because they could see higher prices coming, Macpherson was unequivocal.
“Not in the U.S. We have not seen that in the U.S. We’ve also not seen customers stop projects given the uncertainty,” he said. “We’ve seen things just kind of in normal status here in the U.S. We mentioned before that in Japan, at the end of the first quarter, we saw a little bit of maybe buying ahead just to make sure that, that customers could secure products that are petroleum-based. But not in North America; we haven’t seen that.”
J.B. Hunt: Not characterizing the environment as robust
A team of J.B. Hunt executives spoke at a Bank of America conference on May 12 and discussed how the trucking sector is benefiting in 2026 from a big step up in regulatory activity around driver requirements and illegal activity. Speaking to the broader demand environment, Senior Director of Finance Andrew Hall said the company has seen demand neither fall dramatically nor surge so far this year.
“As I look across end markets, I think food continues to be good from a demand standpoint. […] PMI has been up four months in a row, so industrial demand feels okay,” Hall said. “I just don’t think we’d characterize the overall demand environment as robust by any means. More steady [and] kind of OK. As you know, the big beneficiary for truckload would be housing, and we haven’t seen any real movement there to get us excited.”
CSX: ‘Almost every market is in growth’
A day after the J.B. Hunt team spoke at the BofA conference, CSX CFO Kevin Boone told attendees that harsh winter weather created a lot of volatility for the railroad early this year. But things have notably picked up since, he added.
“Then we saw some better trends, probably across almost every market that we had. And when you look at our merchandise today, almost every market is in growth, with the exception of forest products,” Boone said. “Obviously, there’s a lot of exposure to housing there as well. So that market, while better, you’ve seen some sequential improvement and less negative growth, I would say. That one is still a headwind. But on the coal side, with utility demand, AI [and] all those things, we’re seeing strong demand out there.”
Alcoa: Healthy order books, but how much is from war disruption?
Alcoa President and CEO Bill Oplinger last month told investors that his team is adding smelting capacity around the world to handle business that’s been pushed out of the Middle East by the war in Iran. Speaking at a second BofA conference on May 13, he said the company’s sales are roaring — while also being frank about the difficulty in parsing true demand growth from conflict-related business.
“We’re seeing a switch from customers who had supply chains that reached all the way back to the Middle East and we’re getting customers now coming and saying, ‘Hey, we need supply security.’ And that’s both in Europe and in North America,” Oplinger said. “So while people have talked about demand destruction, we’re just not seeing it. Our order books are improving every week.”
NFIB: Lots of ‘lowest since’ mentions
The NFIB’s latest monthly reading on the current state and outlook of small firms didn’t make for happy reading when it was released May 12. One positive reading is that the index’s uncertainty reading retreated nicely from March, but that measure is, not surprisingly, still far above its historical average.
Corporate profits are booming and the stock markets are hitting records, so hopefully Main Street will follow.
- Bill Dunkelberg and Holly Wade, NFIB
Among the signs that many small businesses are struggling: Nominal sales are weakening and the number of owners expecting higher revenues over the next quarter fell to its lowest level in 12 months.
Similarly, two other components of the NFIB Small Business Optimism Index slipped to their weakest readings since October of 2024, the month before the election of President Donald Trump led sentiment readings to spike: The net percent of owners expecting better business conditions and the share of those saying now is a good time to expand haven’t been this low in 18 months.
Bill Dunkelberg and Holly Wade, who oversee the NFIB report, are crossing their fingers that benefits from last year’s wide-ranging tax bill will truly begin to work their way into the economy’s pipes later this year.
“Corporate profits are booming and the stock markets are hitting records, so hopefully Main Street will follow,” Dunkelberg and Wade wrote. “But consumers have been ‘quiet;’ sales are lagging, and hiring is weak. […] Many uncertainties remain unresolved, but this process will likely get underway over the next few months.”
In summary: Mixed but hanging in there
The key takeaway from this collection of comments: Corporations are in decent shape and the consensus is that, despite everything the economy has had thrown at it in recent quarters, there is still growth. To that point: Indicators such as the Federal Reserve Bank of New York’s Nowcast and the Dallas Fed’s Weekly Economic Index both have second-quarter GDP growth above 2.5%.
But small firms, which are more directly exposed to consumer spending than the publicly traded companies we’ve highlighted here, could be in for a fight for the rest of 2026. The conventional wisdom is that they have fewer levers to pull when it comes to passing along higher input costs — including labor costs and availability, which numerous respondents complained about to the NFIB.
Still, as you begin to shape your outlook and plans for 2027, it makes a lot of sense to rely on a by-now familiar idea. The U.S. economy, as it has for much of this decade, can take a licking and keep on ticking. Case in point: 53% of small-firm owners told the NFIB they were hiring or trying to hire in April. Despite the more negative, worst-since-2024 readings elsewhere in the survey, that figure was up 1 point from March.
About the Author
Geert De Lombaerde
Contributor
A native of Belgium, Geert De Lombaerde joined EndeavorB2B in September 2021 to cover public companies, markets, and economic trends primarily for IndustryWeek, FleetOwner, Oil & Gas Journal, T&D World, and Healthcare Innovation. His work focuses on strategy, leadership, capital spending, and mergers and acquisitions, and he also works with Endeavor Business Intelligence on surveys and data projects.
Geert has been in business journalism since the mid-1990s. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati, initially covering retail and the courts before shifting to banking, insurance, and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in 2008. He led a team that helped grow the Post's online traffic by an average of more than 15% annually before joining Endeavor.
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