Mixed Emotions

Confidence measures among both consumers and small business owners are depressed, somewhat counterintuitively given the strength of the economy. Depressed sentiment doesn’t typically cause recessions, and the Fed has plenty of room to ease, nipping in the bud any problem it does present. A recession isn’t even in our forecast. Still, it’s worth examining why consumers and small business owners are so glum. … Consumers are troubled by the increase in prices since the start of the pandemic, though wages have mostly kept up with prices. … Small business owners may be depressed by flattish revenues and earnings growth. Their hiring is slowing along with quits.