The 2026 Quarter 1 Business Sentiments Survey opened in mid-January and ran for two weeks. Representatives from businesses and nonprofits in D.C. and the metropolitan area were invited to participate. This round of the survey asked respondents to consider economic conditions and expectations, as well as experiences with public safety in the region.
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The Quarterly Business Sentiments Survey is a core product of the D.C. Policy Center’s Alice M. Rivlin for Economic Policy and Competitiveness. Survey results provide real-time insights about the experiences of the local business community and serve as a complement to official economic data that helps inform public debate.
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The D.C. Policy Center’s Rivlin Initiative for Economic Policy and Competitiveness has completed the first round of the Quarterly Business Sentiments Survey for 2026.[1]
The results show that surveyed businesses are entering 2026 under pressure.[2] Demand has weakened, costs remain elevated, hiring has stalled, and six-month expectations for the local and regional economies remain pessimistic.
Insight # 1: Demand has weakened while costs remain elevated.
Most respondents reported little change in conditions in the three months leading up to the survey. However, among surveyed businesses that experienced change in local conditions, the signal was negative.
Twenty seven percent of respondents reported significant declines in the demand for their core products or services. At the same time, 30 percent experienced sharp increases in core input costs. Only 13 percent reported stronger demand and just 6 percent reported cost relief.
Insight # 2: Revenue pressures continue and hiring has stalled.
Since the second round of 2025, more than 30 percent of surveyed businesses have reported declining revenues. The first round of 2026 continued this trend of businesses reporting revenue pressure. Thirty-four percent of the respondents reported declining revenue in the three months leading up to the survey while only 8 percent of respondents reported increasing revenue. Moreover, hiring has stalled. Only 1 percent of surveyed businesses reported adding staff, while 98 percent held employment steady or reduced staff—a reflection of the stagnant local labor market.
Insight # 3: Business leaders report declining foot traffic, rising costs, and the negative effects of federal policies or actions.
For the first time, the Quarterly Business Sentiments Survey invited business leaders to list any notable changes or trends in business conditions in the last three months. These insights help explain the above results. Many noted declining traffic near their businesses and that rising cost pressures remain a strain. More broadly, a number of respondents reported negative effects stemming from federal government policies or actions.
Insight # 4: Six-month expectations for the local and regional economies remain pessimistic.
Six-month expectations by surveyed businesses remain pessimistic. Sixty-six percent expected the District’s economy to be weaker over the next six months. A similar share holds the same view of the national and regional economies. These expectations align with the District’s most recent economic forecast. In February 2026 , the Office of the Chief Financial Officer projected that the city’s economy “will enter a moderate recession in [Fiscal Year] 2026, with real GDP projected to contract by 2.9 percent…” before growth gradually returns in FY 2027. Labor market indicators reinforce this bleak outlook. Between January 2025 and December 2025, the District’s resident unemployment rate rose from 5.3 percent to 6.7 percent.
Insight # 5: Crime concerns appear to have moderated alongside improving public safety indicators, though public safery remains an important concern.
Compared with January 2025, based on the shares of those who reported being more or less concerned, surveyed businesses’ concerns about crime appear to have moderated. Thirty-six percent of respondents reported being more concerned about crime, while 21 percent indicated they were less concerned than a year earlier. In January 2025, 49 percent of respondents reported being more concerned, while 10 percent reported being less concerned.
Almost 75 percent of surveyed businesses reported not being directly affected by crime in the last year. This result likely reflects the decline in crimes. In 2025 compared to 2024, homicides in the District of Columbia fell roughly by a third, motor vehicle thefts dropped by nearly 23 percent, burglaries fell by 28 percent, and thefts by 14 percent.[3]
But even with the declines, the fact that more than a third of surveyed businesses still reported being somewhat or much more concerned — combined with the fact that 20 percent experienced multiple crimes — suggests public safety remains an important issue.
Surveyed businesses enter 2026 facing a difficult business environment
The first round of the 2026 Business Sentiments Survey suggests that the region’s business community faces a challenging environment. A notable share of respondents reported declining revenue, weakening demand, and rising costs. Hiring has stalled, and six-month expectations for the local, regional, and national economies are pessimistic. Public safety concerns appear to have moderated as crime has declined. But this moderation does not offset the other economic headwinds businesses face. All in all, the survey results point to a difficult operating environment and cautious expectations among surveyed businesses heading into 2026.
[1] Conducted online in mid-January 2026, the survey captured what local businesses are experiencing and how they view the months ahead. This round included questions on sentiments about public safety. 226 respondents participated. Many respondents—often business owners—came from businesses that have operated for over a decade (53%) or employ twenty people or fewer (88%). Even so, the surveyed businesses represent a range of sectors. The four sectors with the highest representation in the raw sample were professional, scientific, and technical services sector (19%), restaurants (15%), nonprofits (12%), and real estate (10%).
[2] Using 2025 quarter 2 QCEW data, survey responses are weighted by the industry composition of the D.C. region. Despite this weighting, the survey still faces some standard limitations. One limitation is that the results may not be representative of all local businesses, as non-respondents may hold different views. The raw sample size was 226. The weighted sample size was 220.6. All graphs show weighted results. For the public safety question (insight # 5), the raw sample was 172 and the weighted sample size was 166.05.
[3] Theft is taking someone else’s property. Burglary is unlawfully entering a structure with the intent to commit a crime inside the building.