It’s not your usual economic outlook – recent data unveils a concerning trend with 60% of U.S. states facing a dip in economic activity. How does this align with the Biden administration’s economic strategies?
60% of 50 US states have declining economic activity pic.twitter.com/Sa6Pyvv5KK
— Win Smart, CFA (@WinfieldSmart) January 18, 2024
Recession red flags: Wall Street and Main Street are at odds about the economy
Further evidence that a recession is not just possible but probable.
The U.S. stock market may be at an all-time high, but the “Wall Street – Main Street disconnect” remains wider than ever — and that spells trouble ahead.
Specifically, there’s a dramatic difference in perspectives about the health of the U.S. economy. On the one hand is Wall Street celebrating the stock market’s new records, with many believing the Federal Reserve has avoided a recession by executing a “soft landing.”
Yet the average American is much more pessimistic. I receive numerous emails from readers describing significant and sudden slowdowns in their particular industries and widespread fears in their communities of how much worse it could become in coming months. And the data confirm what they’re saying.
One indicator that does a creditable job of capturing this disconnect is the difference between the Conference Board’s Consumer Confidence Index (CCI) and the University of Michigan’s Consumer Sentiment Index (UMI). The CCI more heavily reflects consumers’ attitudes toward the overall economy, and so is more strongly correlated with the stock market and news headlines about “soft landings” and the like. The UMI, in contrast, is more heavily weighted toward consumers’ immediate personal circumstances.