Yes A checkmark with a circle around it close
Person with stylus editing a digital chart

Chart of the Week

Weekly chart using economic data to address timely market topics from the Wells Fargo Investment Institute Global Investment Strategy team.

January 11, 2022

The Omicron surge — Two trends we are tracking in 2022

This chart shows small-business optimism and consumer confidence data from 2007 through November 2021. The chart shows a deep decline in both readings during the pandemic-driven 2020 recession. In the first half of 2021, both small-business optimism and consumer confidence trended higher, but that reversed in the second half of 2021 to levels well below pre-pandemic readings.Sources: Bloomberg and Wells Fargo Investment Institute. Consumer confidence data as of December 31, 2021 and small business optimism data as of November 30, 2021. Shaded bars represent a recession period. The Conference Board Consumer Confidence Index® is a barometer of the health of the U.S. economy from the perspective of the consumer. The National Federation of Independent Business (NFIB) Small Business Optimism Index is a composite of 10 seasonally adjusted components. It provides an indication of the health of small businesses in the U.S., which account for roughly 50% of the nation's private workforce. This chart was excerpted from the December Economic and Market Strategy Update

Download the report (PDF)

Consumer confidence and small-business optimism modestly improved late in 2021 amidst rising Omicron cases

The chart shows that after rising for the first half of 2021, small-business optimism (brown line) and consumer confidence (purple line) declined in the third quarter of 2021. Since then, consumer confidence steadily improved in the fourth quarter and small business became more optimistic in October and November 2021. But both readings remain well below pre-pandemic levels. We expect investors to eventually look beyond case surges from the Omicron variant of COVID-19 and consumption strength to continue.

After hitting a six-month low of 98.2 in October, the National Federation of Small Business Optimism Index nudged up to 98.4 in November but still indicated pessimism over future capital expenditures and finding labor to fill job openings. The Conference Board Consumer Confidence Index increased to 115.8 in December, up from 111.9 in November.

What it may mean for investors

In our view, the U.S. will continue to be the global growth locomotive through the early part of 2022. Early returns indicate that the highly contagious Omicron variant may slow — but is not likely to reverse — the economy’s growth recovery. We expect above-average first-half growth in the U.S. to average 4%–4.5%, backed by solid job gains and a sizable financial cushion supporting spending.

Risk Considerations

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors.

Global Investment Strategy (GIS) is a division of Wells Fargo Investment Institute, Inc. (WFII). WFII is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.

The information in this report was prepared by Global Investment Strategy. Opinions represent GIS’ opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. GIS does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability or best interest analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee to its accuracy or completeness.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.