Evidence continues to support my observation last month that animal spirits are picking up. The chart above shows the latest (December) Small Business Optimism Index, which has virtually exploded following the November election. Small businesses, who employ 48% (57 million) of all private sector employees, are apparently feeling MUCH better about the future, presumably because they believe that President-elect Trump will be good for business. Regulatory and tax relief such as Trump promises would almost certainly result in more investment, more jobs, and more growth.
As the chart above shows, consumers are also feeling better these days. According to the Conference Board, consumers are more confident today than at any time since the current recovery started.
All of this is crucial and augurs very well for stronger—perhaps much stronger—growth in the years to come. Confidence has been sorely lacking during this recovery, and it shows in the lackluster growth of business investment, as seen in these charts:
UPDATE: (1/19/17) The Architecture Billings Index for December provides yet more confirmation that optimism has returned:
Well, it sure is going to be entertaining to watch Trump.
ReplyDeleteWhat stocks do business with Moscow?
Yes - it seems like he will supply heaps of material to the comedians.
ReplyDeleteIt turns out that hot mug of liberal tears that the Trump fans have been sipping was something else entirely. Or is this another case of Yellow Journalism? Depends with this PEEOTUS.
Obamas parting words: "Hey Donald: Urine my thoughts..."
This is too easy - and admittedly overly juvenile.
His alleged sexual perversion aside (to each their own), there are more serious allegations in that report that could be considered treasonous. I hope that doesn't get over shadowed by the absurdity of his claimed penchant for weak bladder prostitutes.
I still don't think this Trump chaos will be good for this country and personalty will be very surprised if he survives his term. Anyone know if there are legitimate punter odds on that?
Unknown: they called Ronald Reagan the Teflon Man.
ReplyDeleteI call Donald Trump the Velcro Man. But it doesn't matter---everything sticks to him and he still scores a touchdown.
Trump may be our President eight years from now.
Unknown: they called Ronald Reagan the Teflon Man.
ReplyDeleteI call Donald Trump the Velcro Man. But it doesn't matter---everything sticks to him and he still scores a touchdown.
Trump may be our President eight years from now.
I'm betting there is no way he survives 4 years. His lifetime of actions - someone will find something. I don't necessarily wish that, just that it seems the most likely outcome.
ReplyDeleteI am pleased to see small business optimism rising along with consumer confidence. However, I'm not sure this by itself has anything to do with investing in equities. Look at where these measurements were heading into 2000 and again in 2007. I think stocks can do extremely well over the next four years as earnings grow in an economy that does better than 2.1%, but we have got to be cautious. The Fed could kill the party.
ReplyDeleteA market reset bow imminent -- watch for bear to last through 2023-2025 -- DJIA 6,000 -- gold $700 -- nothing good for the next 6-7 years -- be safe...
ReplyDeleteWilliam....Ive noticed that you have been talking like this for the last several years while the market has tripled.
ReplyDeleteUnknown....there is nothing in the report even remotely "treasonous".
Has anybody heard from Marcus Ballbust, lately?
I do love a Wall of Worry.
I think most people are ready to Make America Great Again!
I think we have a pretty good 8 years ahead of us. We will just have to see.
Thank you Scott for this blog! Excellent observations.
I call Donald Trump the Velcro Man. But it doesn't matter---everything sticks to him and he still scores a touchdown.
ReplyDeleteTrump may be our President eight years from now.