March 9, 2021

Small business optimism rose 0.8 point in February to 95.8 after declining 0.9 point in January.

Chief Economist William Dunkelberg said, “The economic recovery remains uneven for small businesses, especially those still managing state and local regulations and restrictions. Congress and the Biden administration must keep small businesses a priority as they plan future policy legislation.”

We see things a bit differently.  For the first time in a year the end of the pandemic is in sight as the available vaccines get distributed in the first  half of this year.  Meanwhile, the government passed a $900 billion corona virus relief package which included checks for $600 being mailed to almost every taxpayer.  Now Congress has passed a $1.9 trillion fiscal stimulus package..  The housing sector is on fire as demand far exceeds supply.  Ditto for the manufacturing sector which cannot keep pace with the inflow of orders.  As we progress through the spring the economic data will firm up as COVID begins to show signs of slowing down. At that time, business and consumer confidence will rise, consumer spending will accelerate — particularly so for bars, restaurants, hotels, airlines, etc.  Manufacturing sector will climb as well.

We saw GDP decline 31.7% in the second quarter, the biggest drop in history.  But fiscal stimulus funds created a 33.4% increase in Q3 GDP growth and GDP growth of 4.1% in the fourth quarter.  We expect to see 6.5% GDP growth in the first quarter, 8.5% growth in the second quarter, and 7.4% GDP growth for the year.

Stephen Slifer

NumberNomics

Charleston, SC