“Further evidence that a recession is not just possible but probable.”
The U.S. stock market may be at an all-time high, but the “Wall Street – Main Street disconnect” remains wider than ever — and that spells trouble ahead. Specifically, there’s a dramatic difference in perspectives about the health of the U.S. economy. On the one hand is Wall Street celebrating the stock market’s new records, with many believing the Federal Reserve has avoided a recession by executing a “soft landing.”
Yet the average American is much more pessimistic. I receive numerous emails from readers describing significant and sudden slowdowns in their particular industries and widespread fears in their communities of how much worse it could become in coming months. And the data confirm what they’re saying. One indicator that does a creditable job of capturing this disconnect is the difference between the Conference Board’s Consumer Confidence Index (CCI) and the University of Michigan’s Consumer Sentiment Index (UMI). The CCI more heavily reflects consumers’ attitudes toward the overall economy, and so is more strongly correlated with the stock market and news headlines about “soft landings” and the like. The UMI, in contrast, is more heavily weighted toward consumers’ immediate personal circumstances.
As you can see from the chart above, while this spread has narrowed slightly from its record high from a year ago, it nevertheless remains higher than ever historically. (Monthly data for the spread extend back to 1978.) The chart also shows U.S. recessions, shaded in gray, according to the calendar maintained by the National Bureau of Economic Research. As you also can see, a recession soon occurred on each prior occasion when the …
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“Further evidence that a recession is not just possible but probable.”
The U.S. stock market may be at an all-time high, but the “Wall Street – Main Street disconnect” remains wider than ever — and that spells trouble ahead. Specifically, there’s a dramatic difference in perspectives about the health of the U.S. economy. On the one hand is Wall Street celebrating the stock market’s new records, with many believing the Federal Reserve has avoided a recession by executing a “soft landing.”
Yet the average American is much more pessimistic. I receive numerous emails from readers describing significant and sudden slowdowns in their particular industries and widespread fears in their communities of how much worse it could become in coming months. And the data confirm what they’re saying. One indicator that does a creditable job of capturing this disconnect is the difference between the Conference Board’s Consumer Confidence Index (CCI) and the University of Michigan’s Consumer Sentiment Index (UMI). The CCI more heavily reflects consumers’ attitudes toward the overall economy, and so is more strongly correlated with the stock market and news headlines about “soft landings” and the like. The UMI, in contrast, is more heavily weighted toward consumers’ immediate personal circumstances.
As you can see from the chart above, while this spread has narrowed slightly from its record high from a year ago, it nevertheless remains higher than ever historically. (Monthly data for the spread extend back to 1978.) The chart also shows U.S. recessions, shaded in gray, according to the calendar maintained by the National Bureau of Economic Research. As you also can see, a recession soon occurred on each prior occasion when the …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]