January 11, 2022
The Omicron surge — Two trends we are tracking in 2022
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.
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