Americans are anxious, and it’s bad news for Trump and the stock market


As coronavirus cases rise, policymakers bicker over how to handle it and jobless claims pick up, consumer confidence collapses.

That’s bad news, according to an analysis by TS Lombard chief economist Steve Blitz: bad for the White House holder, and bad for risky assets like stocks, though there are some caveats to this.

the The Conference Board’s monthly consumer confidence measure fell to 92.6 in July, the group said on Tuesday. In some context, before the pandemic hit, the gauge was at a 20-year high. It is now back to late 2015 levels.

“Granted, confidence has not yet fallen to as low as in previous recessions, but that’s where the risk to the economy lies later this year,” Blitz wrote. “The gap between consumer expectations and real growth is extraordinarily wide and will widen much further after the release of second quarter GDP data on Thursday.”

When the First reading of second quarter gross domestic product released on Thursday, economists polled by MarketWatch believe this will show the economy contracted 34.6% – far worse than the worst reading on record so far.

The confidence report also contains warning signs in the job market, Blitz notes. Sharing survey respondents who say they expect more jobs in the coming months have declined, and those who said they expected fewer jobs rose, even as the number of people expecting their income to decline rose.

“The revenue figure is recessive and corresponds to the first years of the expansion which has just ended,” said Blitz. “The sharp drop in ‘more jobs’ expectations in July tells us that consumers are seeing what we are seeing in the macro data at ground level. If job confidence continues to plummet, a drop in overall confidence would ensue, making it harder to maintain current stock market levels, regardless of the Fed. To be fair, there is a “chicken and egg” quality to the relationship between trust and the stock market. What leads and what lags is hardly consistent, although confidence tends to lead the market out of the recession. “

The relationship between trust and the way Americans vote is more consistent, Blitz noted. When the index goes above 100 in July, the ruling party in Washington typically holds the White House in November. In five of the seven recent races, however, a rating below 100 foreshadowed the loss of a starter.

Read more : Cold comfort from coronavirus: richest 1% lost more wealth in Q1 than the rest of us

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