Line chart tracks consumer and business confidence
Left y-axis: Conference Board Consumer Confidence Index level, right y-axis: NFIB Small Business Optimism Index level; x-axis: 2007-2022
Recessions shown: 2008-2009 and 2020.
Consumer and business confidence measures broadly track together. Both indexes fell markedly during the 2008 – 2009 recession (consumer confidence, from near roughly 106 to below 45, business confidence from 97 to just under 87). This was followed by slow improvement of both indexes, interrupted by a plateauing of both consumer and business confidence in 2015-2016. By 2019, however, consumer confidence rose to about 130 and business confidence reached roughly 105. Since late 2018, both have generally stopped improving, with small business optimism declining to just over 100 at the end of August 2020 and consumer confidence just above 109 at the end of September. By the end of Q2 2022, consumer confidence stood near 110 and business confidence near 96.
Average consumer confidence 10-year average: 104; average small business confidence 10-year average: 98.
Line graph tracks U.S. Economic Policy Uncertainty Index (3-month moving average).
Y-axis: Index value; x-axis: 1985-2021.
Recessions are shown in the early 1990s, the early 2000s, in 2008 – 2009, and in 2020.
Average uncertainty increased in each of the past four recessions. Uncertainty as of Q1 2021 stood at nearly 167. But by the end of Q2 2022 it had fallen to about 155. Table lists average uncertainty for the four periods.
| Period | Average Uncertainty |
|---|---|
| 1985 – 1990 | 113 |
| 1991 – 2001 | 91 |
| 2002 – 2007 | 89 |
| 2009 – 2020 | 130 |
| 2020 – 2022 | 184 |
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 and small-business optimism: monthly data from January 1, 2007 to June 30, 2022. Economic policy uncertainty: monthly data from January 1, 1985 to June 30, 2022. 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 pressure on household finances from rising food, energy, and other costs; higher interest rates; economic fallout from the latest wave of the pandemic; and the war in Ukraine have prompted a steep decline in consumer confidence recently, approaching its low point during the deep 2008 – 2009 recession.
- Small-business confidence has weakened in response to the same uncertainties undermining consumer sentiment, reinforced by an increasingly precarious outlook for economic growth during the second half of 2022.