Main Street is struggling. Faced with stubborn inflation, cautious consumer spending and the U.S. government’s whipsawing global tariffs agenda, small firms saw their rate of growth fade in late 2024 and during the first three months of this year. Restaurants, especially, and retail have particularly lagged.
Since early last year, Main Street—defined as businesses with physical operations, employees and annual revenues of less than $10 million—grew at just two-thirds the average rate for all U.S. firms during the same period. The slowdown marks a sharp turn from Main Street’s post-pandemic recovery, when the sector outpaced other businesses thanks to hundreds of billions of dollars in federal pandemic aid and a surge in consumer demand following an easing of lockdowns and social distancing.
Despite its overall pullback, Main Street has bright spots. Professional services and building contractors have notched strong growth as consumers sharpen their focus on where to spend their dollars. Regional differences are emerging: Smaller firms in the South and Pacific West have outpaced the rest of the country.
The sixth edition of PYMNTS Intelligence’s Main Street Index tracks the health of the country’s smaller businesses in eight key brick-and-mortar segments. These companies heavily impact overall economic growth and stability. Nationwide, they account for 36% of establishments, provide 29% of employment and pay one-quarter of the country’s wages.
Main Street Businesses are Falling Behind
Main Street businesses have underperformed the overall U.S. economy since 2024.
Historically, Main Street businesses, which include restaurants and bars, professional and personal services, construction, remodeling and repair services, fitness clubs, small healthcare providers and a wide variety of retailers, have outperformed their larger peers and firms in other industries. Even after a painful drop in 2020 when the pandemic first emerged, Main Street bounced back, then extended its lead through mid-2022. But in recent quarters, these workhorse businesses lost steam. Over four quarters through Q1 2025, Main Street grew just 2.4%, while the overall business index rose 3.6%. Zooming out, Main Street still managed to beat overall GDP growth of 2.1% for the same period. Our index is a weighted average of three factors: the number of establishments, the number of employees and the total wages paid for select industries.
A closer look at the data reveals two factors behind the slowdown. First, Main Street launched relatively fewer new establishments, with a net increase of just 0.4% compared to 2.9% across the whole economy, including larger companies. Second, Main Street grew its wages at a comparatively slow pace of 2.3%, versus the 3.2% overall rate. Main Street also narrowly trailed other businesses in hiring.
Winners and Losers
Professional services, building contractors and healthcare have performed best throughout the last year.
Some Main Street segments are performing better than others. The biggest winner in the last 12 months has been professional services, which includes independent real estate agents, consultants, computer design specialists, insurance brokers and lawyers.
This segment achieved 7.8% growth, driven primarily by significant increases in employment and wages, rather than by adding new establishments. This climb tracks with prior PYMNTS Intelligence findings that consumers are willing to keep paying for many services amid price increases and economic concerns. Building contractors and healthcare businesses also posted impressive gains, at 5.6% and 3.4%, respectively.
Other segments have not been so lucky. The hardest-hit sectors were eating and drinking establishments, which contracted by 2.4% in the last 12 months, primarily due to a decline in employment on tight labor markets. Retail fared almost as badly, sliding 2.1%. The personal services and repair and maintenance segments also fell, each by 0.8%, though, again, some services, such as salon manicures, are less likely to be skipped when prices rise.
Pain in the Northeast
In the last year, Main Street businesses in the Pacific West and two other regions have thrived, but the rest are in trouble.
Since 2024, three parts of the U.S. have seen their Main Street businesses continue to flourish. Those in the Pacific West performed best, growing 4.2%, followed by the Midwest at 3.9%. Both regions enjoyed strong increases across the board in employment, number of establishments and wages. The South recorded a healthy 3.1% upswing, driven mostly by a spike in employment.
Meanwhile, the other three regions struggled, particularly the Northeast, which contracted 1.4% as the number of establishments and employment declined significantly. The Mountain region did not fare much better, shrinking 0.7%, also due to a loss of workers. The Southwest managed 0.5% growth, with a substantial employment gain but a drop in new establishments.
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Methodology
The Main Street Index is a periodic metric created by PYMNTS Intelligence to measure the health of U.S. businesses with annual revenue less than $10 million and physical operations. It is based on three primary factors: growth in new establishments, real wages and employment using data from the Quarterly Census of Employment and Wages provided by the U.S. Bureau of Labor Statistics.
