The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Less Confident?

02/10/2019

Normally, we look at changes to the stock market that result from changes in the economy.  However, the economy can be changed by what happens on stock market.

In the fourth quarter, the Small Business Confidence Index reached an all-time high.  As long as confidence is high, business is more likely to hire additional workers, replace inventory, and make capital investments.  Confidence is important!

Then, the stock market had a ugly mini-crash in December, and the Confidence Index plunged 27 points, the largest drop in seven years.  While the Index is still positive, it is not nearly as positive as before.

Of course, one bad datapoint does not a recession make, but this one is worth watching.

 

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