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 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.