2025 Wave 2 of 4
The Principal Financial Well-Being Index is our comprehensive quarterly study of the financial health of U.S. employers. The index score factors in business health, growth, and optimism based on economic outlook. Our research draws insights from business owners, key decision makers, and executive leaders across organizations ranging from small businesses to large enterprises (2-10,000 employees) that offer employee benefits and retirement plans.
Businesses report modest improvement in the financial health of their local economy and the U.S. economy. However, recovery lags for their own business.
“Businesses continue to adapt since the April tariff announcements. But today, business owners are striking a fragile balance — they’ve absorbed what they can and are now feeling the full weight of new tariffs. An unpredictable economic landscape continues to impede their planning, and the path to sustained growth still feels uncertain.”
Amy Friedrich
President, Benefits and Protection, Principal®
General uncertainty due to policy unpredictability is the top concern influencing how businesses feel about their growth. Key areas include tariffs and federal grants.
Top 5 industries negatively impacted by tariffs
- Arts, entertainment, recreation (74%)
- Retail trade (70%)
- Manufacturing (69%)
- Leisure and hospitality (68%)
- (tie) Construction; education (67%)
58% of businesses say tariffs have had a negative impact
16% of businesses say tariffs have had a positive impact
36% of businesses say reduction or elimination of federal grants and programs have had a negative impact
“Given that the latest round of higher tariffs have only come into effect in August, smaller businesses are still in the early stages of navigating these challenges. Looking ahead, margin pressures are likely to continue to build, and tariff pass-through to consumers may become more evident in the inflation data in the months ahead.”
Seema Shah
Chief global strategist, Principal Asset Management®
91% of businesses maintained or increased staff in the last three months—steady compared to 90% in April 2025
15-point drop in comfort with cash flow
68% of businesses are comfortable with cash flow compared to 83% in November 2024
68% of businesses have already raised prices or plan to within the year
65% of large (500–10,000 employees) have passed along costs
53% of small (2–499 employees) have passed along costs
They won’t reduce or eliminate employee benefits.
More than one-third of businesses prioritize benefits so strongly that they won’t consider cutting them. This was by far the top answer in our survey.
“The labor market has shown real resilience, despite rising cost pressures. Business owners are adapting to tougher conditions and treating layoffs as a last resort. Their priority is keeping teams intact so they’re ready to capture growth opportunities when conditions improve.”
Amy Friedrich
President, Benefits and Protection, Principal®
The Principal Financial Well-Being Index℠ (WBI) Wave 2 (July 10-July 28, 2025) is recurring research used to track sentiment around repeated financial health measures and timely issues relevant to businesses.
Business owner, decision maker, and leader participants who represent companies with 2–10,000 employees (n=1,000) provide information by completing a 15-minute online survey. Access to sample is provided by ROI Rocket, a third-party research panel provider.
In 2025, the WBI added a formal index. The index number in the WBI is calculated by taking responses from six perceptual measures evaluating current financial health, financial comparisons year over year, and projections for business and economic outlook. The percentages of respondents who answered positively for each measure are averaged and standardized to a 0–10 scale, with perceptions of business/company, local economic, and U.S. economic growth weighted 60%, 20%, and 20% respectively within their aggregate measure.
Small businesses = 2–499 employees, Large businesses = 500–10,000 employees
