Courtesy of Mish.
Hooray! On March 17, the widely-followed University of Michigan Consumer Sentiment Index hit a 17-year high.
The Fed and most of mainstream media believe consumer sentiment relates to consumer spending. It’s one of those beliefs that is bandied about that no one seems to have thoroughly investigated.
Last week, John Hussman posted an interesting chart comparing consumer sentiment to the stock market. But let’s dive deeper. Specifically, let’s see how sentiment does or doesn’t relate to retail sales.
To kick off the discussion, consider a set of interesting quotes by Fed Chair Janet Yellen, Bloomberg Econoday, and John Hussman on consumer confidence.
Janet Yellen: “Household spending continues to rise at a moderate pace, supported by income gains and by relatively high levels of consumer sentiment and wealth.” The quote is from the FOMC Press Conference on December 14, 2016.
Econoday: “The consumer sentiment index, which unlike other confidence readings had been edging back slightly, is once again showing increasing strength, at 97.6 for the preliminary March reading vs February’s final at 96.3. The gain is centered in the current conditions component which rose 3.0 points to 114.5, a 17-year high and offering an early hint of strength for March consumer spending.” The preceding quote from Econoday on March 17, 2017.
John Hussman: “Multi-year highs in consumer confidence are less a sign of forthcoming consumer spending as a sign of forthcoming investor losses.” That quote is from a Hussman Tweet on March 9, 207. His chart follows.
Consumer Confidence vs. S&P 500
