U.S. consumers are slightly more pessimistic about the economy, but investors are upbeat, according to two separate surveys. Why the divergence?
Major central banks are on the brink of peak rates — but the inflation battle might not be overU.S. consumer sentiment, according to the University of Michigan Surveys of Consumers, edged down from 69.5 in August to 67.7 in September, more than economists had expected. To put that reading in perspective, the all-time low of 50 was in June 2022 , and the historical average is 86.On the bright side, consumers now expect inflation to drop to 3.1% in a year, the lowest figure since January 2021.
But if you want to be pessimistic about it, those two data points — lack of confidence about the economy but hopeful about inflation falling — suggest that consumers think inflation will drop in a year because things won't be great for the economy. That is, the scary R-word will arrive eventually, depressing prices.
The mood on Wall Street, however, is markedly different."Investors remained upbeat about the outlook for stocks and the economy in August," according to a. They expected stocks to return 5.5% over the next 12 months and thought there's only a 5.4% chance of an"economic disaster" in the coming 12 months.
Indeed, corporate earnings could see a rebound in the fourth quarter this year, Edward Jones senior investment strategist Mona Mahajan told CNBC's"Squawk on the Street." The rebound in earnings could even hit double-digits in 2024, Mahajan added. Does Wall Street know something that ordinary U.S. consumers don't? Or are consumers just more realistic than investors, who are still relishing the unexpected rally in stocks this year? (Investors who are luxuriating in the rally may want to heed
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