In this episode we discuss the complexities of consumer confidence and its profound impact on the economy and dissect recent trends highlighted in the University of Michigan Consumer Confidence Survey, as well as how these trends may predict future spending patterns. The crux of the discussion lies in the correlation between consumer sentiments, inflation expectations, and their consequent effect on market dynamics.

Megan starts by addressing the recent unsettling dip in consumer confidence, noting that it has reached a six-month low. This decrease has been most significant in consumers' expectations for the economy's future, marking the most considerable monthly decline since June of 2022. Such pessimism, particularly regarding the labor market—with a 40% segment anticipating an unemployment rate rise—could herald changes in consumer behavior and spending.

The episode touches on the disconnect between consumer expectations and market predictions, particularly concerning interest rates. While only a quarter of surveyed individuals foresee a drop in interest rates, markets have priced in at least one rate cut. This disparity invites listeners to ponder the potential for unforeseen market responses and the importance of aligning consumer outlook with economic forecasts.

A significant focus of the discussion revolves around inflation expectations and their potential to incite anticipatory spending. With consumers bracing for higher prices, there is a concern that this behavior could fuel inflation further. The survey indicates that inflation expectations for the coming year have surged to 3.5%, reaching another six-month high. Long-term expectations have also risen, suggesting that consumers do not anticipate a reprieve in rising prices anytime soon.

The upcoming week will be packed with pivotal economic data releases such as CPI, PPI, retail sales, and housing data. These reports will be instrumental in understanding the broader economic landscape and the possible ripple effects of shifting consumer moods.

https://youtu.be/6i_Zjm_2gpg

Disclaimer: material was prepared by Verdence Capital Advisors, LLC (“VCA”). VCA believes the information and data in this document were obtained from sources considered reliable and correct and cannot guarantee either their accuracy or completeness. VCA has not independently verified third-party sourced information and data. Any projections, outlooks
or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. This material is being provided for informational purposes only and is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice. Past performance is not a guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product or anynon-investment related content, made reference to directly or indirectly in these materials will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any
discussion or information contained in this report serves as the receipt of, or as a substitute for, personalized investment advice from VCA. Due to various factors, including changing market conditions and/or applicable laws, the co...