Consumer Confidence Peaks & Market Peaks?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
ResearchMed
Posts: 7702
Joined: Fri Dec 26, 2008 11:25 pm

Consumer Confidence Peaks & Market Peaks?

Post by ResearchMed » Tue Nov 28, 2017 10:18 am

Apparently, consumer confidence is at a multi-year high.

In the past, during the peaks shortly before and immediately prior to serious market declines (not just crashes, but those, too, of course), how did "consumer confidence" match - or not?

RM
This signature is a placebo. You are in the control group.

GLState
Posts: 141
Joined: Wed Feb 15, 2017 10:38 am

Re: Consumer Confidence Peaks & Market Peaks?

Post by GLState » Tue Nov 28, 2017 11:54 am

Consumer Confidence has hit "multi-year" highs numerous times since 2008 without a crash or decline (see St Louis Fed link below). Recently, U of Michigan and the Conference Board indicators have continued to increase, while the Yale measure had a sharp drop. It seems logical that Consumer Confidence would always be higher before a decline than after...the hard part is determining which peak beforehand.

https://fred.stlouisfed.org/series/UMCSENT
https://www.conference-board.org/data/c ... idence.cfm
http://som.yale.edu/faculty-research/ce ... ce-indices

The year over year change in consumer confidence seems to be used as an indicator more often than the current CC level. A 20% drop in the year-over-year change in CC seems to be a fairly good indicator of recession ....but, at times it comes too late to be able to do much about it.

User avatar
Sandtrap
Posts: 5500
Joined: Sat Nov 26, 2016 6:32 pm
Location: HawaiišŸ˜€ Northern AZ.šŸ˜³ Retired.

Re: Consumer Confidence Peaks & Market Peaks?

Post by Sandtrap » Tue Nov 28, 2017 1:28 pm

ResearchMed wrote: ā†‘
Tue Nov 28, 2017 10:18 am
Apparently, consumer confidence is at a multi-year high.

In the past, during the peaks shortly before and immediately prior to serious market declines (not just crashes, but those, too, of course), how did "consumer confidence" match - or not?

RM
Interesting question.
How much of consumer conference is based on real market valuations and economic conditions?
Does one follow the other or vs vs?
Or is CC part of the noise that a Boglehead must tune out?
Is this correct ?
j :D

Post Reply