U.S. Outlook: Are confidence gains becoming delusional?

Scott Anderson
Posted by Scott Anderson
Chief Economist

Alan Greenspan coined the phrase “irrational exuberance” to describe the disconnect between stock market gains and economic fundamentals in the late 1990s.

Graph showing recent rise in consumer confidenceIs it time to use the phrase again?

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 31.

Key observations:
  • Nowhere has the surge in confidence been more visible than with the Conference Board’s Consumer Confidence Index, at a high we’ve rarely seen.
  • A big driver of consumer confidence is coming from consumers’ evaluation of the labor market today and in the future.
  • Outside of the labor market and business and consumer confidence surveys, the U.S. economic data has been generally mediocre.
  • The surge in confidence is a welcome development but warrants investor caution until it’s backed up by real economic evidence of stronger growth.

Click here to read my full report.

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