Confidence at a turning point

Sources: The Conference Board; National Federation of Independent Business (NFIB); Economic Policy Uncertainty Index—Baker, Bloom, and Davis; Bloomberg; and Wells Fargo Investment Institute. Consumer confidence: monthly data from January 1, 2007 to September 30, 2021. Small business optimism: monthly data from January 1, 2007 to August 31, 2021. Economic policy uncertainty: monthly data from January 1, 1985 to September 30, 2021. Shaded area represents a U.S. economic recession. The Consumer Confidence Index (CCI) tracks sentiment among households or consumers. The NFIB Small Business Index tracks the general state of the economy as it relates to businesses. The U.S. Economic Policy Uncertainty Index developed by Baker, Bloom, and Davis is based on newspaper coverage frequency as index proxies for movements in policy-related economic uncertainty.

Key Takeaways

  • Worries over economic fallout from the latest wave of the pandemic were largely responsible for a steep decline in several measures of consumer confidence last quarter. Consumer sentiment is expected to rebound as the latest wave of the pandemic eases and economic growth regains momentum.
  • Small-business confidence may have weakened with consumer confidence in August, given the group’s exposure to retailing, restaurants, and other frontline industries hit hardest by the pandemic’s latest wave.