Confidence has steadied at lower levels

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 December 31, 2023. Economic policy uncertainty: monthly data from January 1, 1985 to December 31, 2023. 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.