Hello. I’m Daniel Greulich, Chief Investment Officer of GreenUp Wealth Management. Today, we’ll be examining how individuals feel about the U.S. Economy, specifically consumer sentiment.
Consumer sentiment is a vital aspect of the economy, as it influences the consumer’s overall spending and economic growth. This reflects the feelings and the attitudes that consumers have towards their personal economy. Because roughly 68% of the U.S. economic growth is driven by consumer spending, how consumers feel can be a very powerful indicator for the stock market.
For example, an increase in consumer sentiment directly correlates with a rising stock market and a growing economy. Conversely, a decreasing consumer sentiment means a decreasing stock market and contracting economy.
The following chart exhibits the University of Michigan Consumer Sentiment Survey, which in turn shows consumer sentiment bottoming in July of 2022 at a reading of 50. In February of this year the measurement came in at a 67. This shows continued improvement in how the consumer feels and it legitimizes the positive stock market performance that we’ve seen since October of 2022.
Thanks, and have a great day!