The D.C. Policy Center’s Quarterly Business Sentiments Survey provides systematic, comprehensive information on the business community’s experiences to elected officials, the media, and the public. Recently, the D.C. Policy Center’s Rivlin Initiative completed the second Business Sentiments Survey of 2025, and the sixth overall since the survey’s launch. Conducted over a two-week period in mid-April, the survey captured insights into expectations for the local, regional, and national economies over the next six months, recent business experiences, and the adoption of artificial intelligence in the workplace. This round of the survey received 268 responses.
Second-round respondents primarily came from small, established businesses in the D.C. region.
Second-round participants—who were mostly owners or executives–tended to come from small, established businesses.[1] 86 percent came from businesses with fewer than 20 employees, and 55 percent came from businesses that have been operating for more than a decade. Second-round survey respondents primarily came from the professional, scientific, and technical services sector (22 percent), the real estate and leasing sector (15 percent), and restaurants (9 percent).[2] Although the survey captured an important segment of the D.C. region’s business community, the results reported below are still subject to limitations that are common to most surveys.[3]
Finding # 1: Economic expectations have deteriorated.
Second-round survey respondents’ six-month expectations for the local, regional, and national economies have become quite pessimistic since the first round of 2025. Only 9 percent of respondents expected the District’s economy to strengthen over the next six months, and expectations for the regional and national economies were similarly downbeat.
This greater pessimism likely stems from the current administration’s trade policies and efforts to scale back the federal workforce. Higher tariffs could upset supply chains that businesses rely on and result in higher prices for consumers. Meanwhile, the efforts to reduce the federal workforce will likely worsen the employment picture in the District and the broader region. Between January and March 2025, federal government employment declined by 0.8 percent in the District and by 1.4 percent in the broader D.C. region.
Finding # 2: Access to capital is expected to tighten.
Concerns about access to capital have grown considerably since late 2024. 44 percent of businesses are expecting capital to become harder to access, while only 8 percent anticipated it would become easier. This marks a sharp reversal from the end of last year, when more businesses expecting a change anticipated easing financial conditions.
Finding # 3: In the past three months, business conditions remained largely unchanged, but revenue declines became more common.
A majority of survey respondents reported little to no change in staffing, space used, or revenue in the past three months. However, of those reporting a change, a growing share reported revenue declines. Compared to the first round of 2025, when 25 percent of businesses reported declining revenue, the 37 percent reporting declines this round—an increase of 12 percentage points—marks a notable shift.
Finding # 4: AI appears to be used by surveyed businesses primarily as a complement to labor rather than as a replacement.
Among the survey respondents who chose to answer questions about artificial intelligence (AI), 54 percent reported using AI in some capacity, mostly for customer engagement, data analysis, and forecasting. 89 percent of those that adopted AI either maintained or increased staffing levels.
Looking ahead, roughly half of the surveyed businesses indicated plans to use AI in the next three years. Of those, 46 percent intended to use it with employee oversight. These findings suggest that businesses are currently using AI as a tool to enhance productivity rather than replace labor.[4]
Ultimately, however, the long-term implications of AI adoption are uncertain. It is not clear whether the present wave of artificial intelligence will, on balance, substitute for labor or act as a complement. Research suggests that college-educated, high-income workers with STEM backgrounds are particularly ‘exposed’ to AI. In the District, these workers account for nearly 40 percent of the workforce.
Economist David Autor has argued that artificial intelligence could help “rebuild middle class jobs” by making jobs performed by experts more accessible to a broader pool of workers. In Autor’s words, AI would act as an additive to human judgment and help reduce “the monopoly power that doctors hold over medical care, lawyers over document production, software engineers over computer code,” and that university professors hold “over undergraduate education…”
But whether Autor’s vision materializes—or whether AI will eliminate jobs as automation did for telephone switchboard operators—remains to be seen.
[1] As in previous rounds, the majority of survey respondents were recruited via email using a list of registered businesses in the District of Columbia.
[2] As in previous rounds, to ensure the results reflected the industry distribution of businesses in the D.C. region, we weighted survey responses using data from the QCEW for the third quarter of 2024. The charts presented in this report rely on the weighted data. For findings 1, 2, and 3, the weighted sample size is approximately 267.3. For the question related to Finding 4, which addresses changes in the number of employees, the weighted sample size is approximately 83.5. For the question on plans to use AI within the next three years, the weighted sample size is 153.9.
[3] For instance, the sentiments of those who completed the survey may not represent those of non-participants.
[4] The national case of bank teller employment sheds how automation can complement labor. Perhaps surprisingly, bank teller employment modestly increased following the spread of automated teller machines (ATMs). Rather than eliminating jobs for bank tellers, ATMs changed the nature of the job and enabled banks to increase the number of branches across the country. Bank tellers shifted their focus toward building relationships with customers and promoting new services that might be of interest.