Differing Business and Consumer Confidence

Chart Differing Business and Consumer Confidence

Historically, consumer and business confidence have moved in similar directions albeit not always by the same magnitude, as indicated by the chart above. Recently, however, business and consumer confidence levels have diverged sharply. This occurrence can partially be explained by the current U.S.-China trade dispute, which has been felt first by businesses due to the fact that many of the goods that have been targeted thus far have been inputs to manufacturing or other production processes as opposed to end market consumer goods. This may change if recently announced tariffs by the U.S. go into effect in September and December which more directly target consumer goods. Regardless of the driver, businesses are often upstream of consumers when it comes to feeling economic pressure, which would mean now is a good time to be cautious. Although business confidence has been moving lower and should be taken note of, confidence levels are still at strong absolute levels along with numerous other economic data points that still support a growing U.S. economy, albeit at a slower rate.