Ed Yardeni recently highlighted the surge in small business confidence, earnings and employment plans as part of a scenario of what could go right.
Beneath the surface, there were a number of contradictions that were evocative of official Chinese economic statistics.
A confidence bifurcation
The first problem is how consumer and business confidence is measured. Jim O’Sullivan observed a significant partisan divide in the Bloomberg consumer comfort figures.
There was a similar partisan divide in University of Michigan consumer expectations.
Opinions vs. hard data
The NFIB small business population sample is skewed heavily small-c conservative and Republican. It is therefore no surprise that small business confidence and investment plans are surging. But how reflective is that of reality?
Instead of focusing on survey opinion data of how respondents felt, I analyzed hard figures of actual small business employment from Paychex, which processes payroll data for a wide swath of American small businesses. To my surprise, the Paychex Small Jobs Index was actually declining. Wait, what?
The wage data was nothing to write home about. The pace of wage gains was decelerating, despite the widespread complaints from the NFIB survey about finding qualified applicants. Weekly hours have been rising, but pace was not significantly different from levels during the Obama years.
Are these American business confidence statistics with Chinese characteristics? You tell me.