Dont Feel So Good

US consumer confidence drops in September

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What's going on?

Survey results out on Tuesday showed consumers dont feel so good about the state of the US economy. Their vanishing confidence could be a self-fulfilling prophecy which wouldnt bode well for stocks.

What does this mean?

American consumers were asked how confident they are in the economy this month and, compared to August and to economists predictions, that confidence had evaporated faster than Spider-Man after the Thanos snap.

Consumers shoulders appear to have dropped given the recent escalation of tariff-driven entanglements between the US and China as well as a declining belief that job opportunities are plentiful in the, er, land of opportunity (consistent with data earlier this week). In fact, the lack of certainty on how both of these might affect the economy going forward led consumer expectations to fall to their lowest level since January.

Why should I care?

For markets: An important signal.
Falling confidence might lead consumers to spend less, so the strong US economic activity reported on Monday might yet be a bright spot in an otherwise gloomy trend. Survey data doesnt have the weight of hard economic figures, but 65% of the US economy is comprised of the services industry which is largely driven by consumer spending. Itll therefore be important to investors forecasting the overall growth of the US economy: economists currently think it grew 2% larger this quarter than the same time last year.

For you personally: Housing drives confidence.
Data out on Tuesday also showed that US house prices were up just 3% in July, and prices in 20 major cities rose only 2% higher than a year ago the slowest increase in almost seven years. Two-thirds of Americans own a home: if youre among them, how you feel about your wealth and by extension your confidence in the economy will likely be inextricably linked to the value of your property.

Originally posted as part of the Finimize daily email.

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