Business and Consumer Optimism, At Last

Last Updated Nov 12, 2010 12:10 PM EST

The big issue this week is the sweeping proposal by the Presidential commission on deficit reduction. But I leave that to my blogging peers, to focus instead on the here-and-now issues of consumer and business confidence -- much more timely. And the news is good, but not overwhelmingly so.

Small businesses are more optimistic. Actually, the National Federation of Independent Business is not all that happy, but it's an improvement:

Optimism rose again in October to 91.7...This is still a recession level reading based on Index values since 1973. However, job creation plans did turn positive and job reductions ceased.
Here's a picture of their overall index. Still depressed:


Importantly, small business sales trends are picking up:

The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months improved four points to a net negative 13 percent, 20 points better than May 2009 (the recession bottom). The net percent of owners expecting higher real sales gained four points from September, rising to a net one percent of all owners (seasonally adjusted).
Still, when asked for their most pressing problem, small business owners point to sales:


In past recoveries, sales have never been this big a problem -- even more than taxes!

And now for the consumer side. Per Bloomberg:

The Thomson Reuters/University of Michigan preliminary sentiment index rose to 69.3, in line with the median forecast of economists surveyed by Bloomberg News and the highest level since June, from 67.7 in October. The measure averaged 88.9 in the five years to December 2007, when the last recession began.
Here's a graph, but it does not include the latest uptick:


Not great.

I also get weekly reports on retail sales. Johnson Redbook says sales in the first week of November were up 2.6 percent. The rate of increase has not been going up, growth actually looks pretty good compared to recent memory.


The presidential commission stuff is all well and good, but to get it all going again we first need more retail activity. Buy more stuff!