Small Business Optimism Surges

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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 that 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: