Line chart showing the 12-month moving average of small business optimism and consumer confidence from January 2007 to March 2024 and the 10-year averages. Small business optimism is as of February 2024. This chart also displays when a U.S. recession occurred. Consumer confidence and small business optimism were on the rise from 2020 lows but started to decline in 2022. Consumer confidence and small business optimism trended lower in early-2023 but showed signs of recovering in mid-2023 before stalling later in the year. Consumer confidence 10-year average is 109 and small business confidence 10-year average is 98.
Line chart showing the 3-month moving average of the U.S. Economic Policy Uncertainty Index from January 1985 to March 2024. Economic policy uncertainty typically increases during recessions. The index reached a peak during the beginning of the Covid-19 pandemic, and then declined before troughing in late 2021. The index may have peaked late last year, but economic uncertainty began to rise again in the second quarter of 2023.
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 March 31, 2024. Small business optimism: monthly data from January 1, 2007, to February 29, 2024. Economic policy uncertainty: monthly data from January 1, 1985, to March 31, 2024. 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
- Consumer and small-business confidence have been suppressed by tight credit, pressure on finances and, for small businesses, a tight labor market and margin pressure from relatively weak pricing power.
- Policy uncertainties, reduced since the passage of stimulus packages in 2022, risk moving higher again during the 2024 election year.