Consumers Run From Stocks

The New York Fed runs a monthly survey of consumer expectations (SCE) which covers topics ranging from inflation, the labor market, and household finances, and while its history is limited (starts in 2013), it provides a great look at where US consumers see the state of the economy and financial markets. The latest update for the month of June was released earlier today and provided some really interesting insights regarding different trends, but one we wanted to focus on here is how Americans view the prospects for stock prices.

As the equity market has weakened this year amid higher inflation and the Fed’s rate hike cycle, consumer sentiment towards the stock market has been declining, but the pace has really picked up in the last two months taking the total percentage of consumers expecting higher stock prices to its lowest level (33.8%) in the history of the survey. Put another way, just about two-thirds of US consumers expect stock prices to remain flat or decline over the next 12 months. Add this to the long litany of other sentiment surveys showing investors and consumers alike have little confidence in the stock market. 

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