Main Street Businesses Are Outperforming the US Economy

• The post-pandemic growth for most Main Street businesses surpasses analysts’ expectations.
• Main Street businesses in the construction and remodeling sectors have seen the most significant upticks in both growth and wages.
• U.S. Main Street businesses in the Mountain states have experienced a 53% growth surge in the last decade.

PYMNTS Intelligence frequently looks at the landscape of the small businesses that populate U.S. Main Streets, as they offer a way to gauge the health of the larger U.S. economy. As we recently reported, despite signs of an economic slowdown, most Main Street businesses operating in the U.S. have proven somewhat more resilient than their larger counterparts. In fact, in the last 12 months, Main Street businesses have operated with the lowest risk of closing since early 2020.

Additional data uncovered by PYMNTS Intelligence while compiling its exclusive Main Street Index supports this upbeat news. The index finds that most Main Street businesses are enjoying faster growth levels post-pandemic than many analysts predicted.

The Main Street Index is an aggregate, quarterly metric created by PYMNTS Intelligence to measure the health of U.S. Main Street businesses, 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.

According to the Index, Main Street businesses operating in certain sectors — building and contracting, dining, repair work and others — exhibit solid growth. Additionally, those operating in the Mountain, Southwest and Midwest regions of the U.S. have proven to be especially sturdy, suggesting small and mid-sized businesses in these regions may be poised for future growth.

Key Findings

According to the Main Street Index, most Main Street businesses have overcome pandemic-era volatility.

PYMNTS Intelligence’s Main Street Index indicates that Main Street businesses, in general, have bounced back from pandemic-era sluggishness at a rate now outpacing pre-pandemic predictions. A rise in the number of new establishments has largely driven this growth, a rate 18% higher than pre-pandemic levels.

While Main Street’s business performance had been more volatile during the pandemic than the U.S. economy as a whole, it has stabilized in the last quarters. Since Q1 2020, it has outperformed the U.S. economy by 2%.

Main Street businesses in the construction sector have been building the strongest post-pandemic bump in performance.

A 10% post-pandemic increase in building, contracting and remodeling work primarily drove the Main Street Index growth. A 14% increase in construction worker wages also fueled the growth in the construction sector.

Meanwhile, other sectors have also made progress. Main Street businesses in the service/repair, dining, personal services, healthcare and fitness sectors all report growth in the last year. However, businesses in the retail sector have remained static since May 2023, when, according to the CDC, the pandemic ended. This stagnancy indicates they are having a more challenging time recovering than firms in other industries.

Main Street businesses operating in the Southwest, Midwest and Mountain regions have experienced the most post-pandemic growth.

Regionally, Main Street businesses operating in the Northeast, Midwest and Mountain portions of the U.S. have grown roughly 5% since Q1 2023. Growth in the Midwest benefited significantly from a surge in businesses opening their doors there. However, in the long haul, Main Street businesses in the Southwest and Mountain regions have grown the most, with the Main Street Index rising 53% for the Mountain Region between 2014 and 2024.

Conclusion

It wasn’t long ago that many analysts were pessimistic about how these businesses would fare in a post-pandemic America. However, as PYMNTS Intelligence’s Main Street Index illustrates, most U.S.-based Main Street businesses have demonstrated resiliency. They have bounced back to the point where their business growth outpaces that of larger firms.

However, some still lag. Retail-oriented Main Street businesses appear to be most challenged to find footing. Still, nearly every other Main Street business sector defies expectations. And those operating in the western half of the U.S. appear to be especially well-positioned for future growth.

For more on Small Business Week, read “67% of Successful Small Business Merchants Embrace Social Commerce.”

About

PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multi-lingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.

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