• A recent survey of small businesses raised numerous red flags about the economy, including trends that point toward potential stagflation pressure. That’s as President Donald Trump keeps companies guessing on what he will do next on federal layoffs and tariffs, raising uncertainty about prices, costs, and expansion plans.

Small businesses are the backbone of the American economy as they employ the vast majority of workers, and they are flashing warnings on stagflationary pressure.

On Tuesday, the NFIB Small Business Optimism Index fell by 2.1 points in February to 100.7 while the reading on uncertainty rose 4 points to 104, the second highest level recorded.

Other findings raised red flags: fewer business owners expect the economy to improve, sales expectations were gloomier, and profit trends worsened.

Additional data points could raise alarms about stagflation, a combination of slower growth or contraction plus higher inflation.

The survey found that just 12% of owners think now is a good time to expand, a 5-point decline from January and the largest monthly decrease since April 2020—when the economy was still reeling from the early stages of the COVID-19 pandemic.

And the share of business owners who are raising average selling prices jumped 10 points from January. That’s the largest monthly increase since April 2021, when the post-pandemic inflation surge was taking off, and the third highest in the survey’s history.

“Confidence that the economy will continue to grow is fading, even with a new management team in place,” the NFIB report said, alluding to the Trump administration.

It cited US tariffs and retaliation from affected countries as well as the federal government shedding workers and trimming expenditures.

NFIB added that many small businesses are supported by work from other firms with government contracts.

“All consistent with the general tone of the financial press, the economy is still growing, but at a slower and slower rate, storm clouds are forming,” it warned.

The mounting pessimism among small-business owners is also echoed by consumers—whose spending is the driving force behind GDP and previously kept the economy resilient through Fed rate hikes.

The latest University of Michigan sentiment survey tumbled 11% from the prior month due to inflation fears. Year-ahead inflation expectations jumped up from 4.3% last month to 4.9% this month, the highest since November 2022 and the third straight month of an unusual large increase. Long-run inflation expectations surged from 3.5% to 3.9%, the largest month-over-month increase since 1993.

Torsten Sløk, chief economist at Apollo Global Management, said in a note on Thursday that this is a “wait-and-see economy” characterized by consumers and firms turning more cautious about spending decisions.

“The wait-and-see economy is no longer just for companies directly involved in trade with Canada and Mexico. Uncertainty for small businesses is near all-time high levels. This is a problem because small businesses are the foundation of the economy, accounting for more than 80% of total US employment,” he warned.

This story was originally featured on Fortune.com

• After Warren Buffett sold $134 billion in equities in 2024 and is sitting on a $334 billion cash pile, one analyst said the “Oracle of Omaha” saw the current selloff coming. While it’s unlikely Buffett will make any big moves during the current market turmoil, some think he’ll look internationally or round out his insurance business.

Amid the stock market selloff, Berkshire Hathaway CEO Warren Buffett’s recent capital movements suggest he was preparing for it, according to an analyst. 

After tumbling more than 10% from its last peak, the Nasdaq remains in correction territory. The S&P 500 also entered a correction, though Friday’s rally pared its decline to less than 10% from its all-time record.

That has highlighted Berkshire’s recent cash hoarding as especially prescient. When asked if Buffett saw the selloff coming, Armando Gonzalez, founder of AI-powered research platform Bigdata.com, said the evidence suggests he did.

“Buffett’s actions over the past year have been a textbook example of positioning for turbulence,” he said in an emailed response to questions from Fortune.

Berkshire sold $134 billion in equities in 2024, ending the year with a cash pile of $334.2 billion—nearly double from a year ago and more than its shrinking stock portfolio of $272 billion. 

Gonzalez also noted that Buffett’s recent comments have been riddled with caution, emphasizing inflationary concerns and geopolitical uncertainty. For example, he warned that President Donald Trump’s tariffs will cause prices to rise.

“History shows when Buffett turns net seller, he often anticipates a period of subpar market performance,” Gonzalez said. “And once again, the Oracle of Omaha seems to have been ahead of the curve.”

With stocks well off their highs, that begs the question: will the famously value-conscious Buffett start deploying his cash by making some big purchases?

To be sure, Berkshire has made some moderate stock buys. But preferring bargains, Buffett historically looks to invest heavily in companies when valuations are low. During the peak of the 2008 financial crisis, for instance, Buffett deployed $3 billion into General Electric whose stock price had nosedived.

In his latest letter to Berkshire shareholders, Buffett reiterated his years-long view that valuations remained high. 

Gonzalez said it’s possible Buffett could start buying but only if true bargains emerge, noting that his track record shows a deep aversion to haste, even when markets tumble.

“He has no interest in timing the market’s bottom, nor does he chase short-term rebounds,” he said. “Instead, he waits for moments when fear drives prices to levels where the risk-reward equation tilts decisively in his favor.”

If Buffett should choose to finally make a big purchase, Gonzalez expects his next move to be used with a scalpel rather than a “broad-market splash,” if any at all. 

“In Buffett’s world, patience is more than a virtue, it’s a weapon,” he added.

While it’s uncertain if Buffett will go forward with a deal during the current market selloff, CFRA Research’s Cathy Seifert told Fortune she wouldn’t be surprised if Berkshire rounded out its insurance holdings. 

She added that valuations are still not dirt cheap, while the cash Buffett has parked in Treasury bonds is yielding him a good return and the competitive environment for deals has changed.

Additionally, Buffett has shown keen interest in Japanese trading companies, suggesting “a growing appetite for international diversification,” Gonzalez said. 

Since 2019, Berkshire has invested in the five biggest Japanese “sogo shosha,” which invest across sectors domestically and abroad. The trading houses—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo—operate “in a manner somewhat similar to Berkshire itself,” Buffett wrote in his annual letter.

While Buffett sits on his pile of cash, his deployable funds may grow even more as rumors of a rare Berkshire sale circle.

The Wall Street Journal reported that real-estate brokerage Compass was in advanced talks to acquire Berkshire Hathaway’s HomeServices of America.

According to Berkshire’s annual report, HomeServices has 820 brokerage offices and 270 franchisees in 2024.

Berkshire Hathaway did not return Fortune’s request for comment.

This story was originally featured on Fortune.com

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