The Fed is a big believer in consumer confidence numbers. I never understood why because I never could see a strong correlation between confidence and spending.
There is a strong correlation, but it isn’t spending habits. John Hussman provides the answer below.
Multi-year highs in consumer confidence are less a sign of forthcoming consumer spending as a sign of forthcoming investor losses. pic.twitter.com/2jCJYt8T4Q
— John P. Hussman (@hussmanjp) March 9, 2017
Let’s break out that chart with some vertical bars to better indicate what consumer confidence really measures.
(Click on image to enlarge)
Comments
Log in or sign up to join the conversation.