Home Guides & Resources chevron_right Economy and the Markets Chart of the Week: How Low Will Sentiment Sink? Published June 21, 2022 Jeffrey DeMasoPortfolio Manager It feels like everyone’s got a frown on their face lately. The University of Michigan has been asking consumers how they feel about the economy for decades. The response this month was the most pessimistic ever recorded. You read that right: Consumers are more concerned today than they have been at any point since the 1970s. And that period includes some episodes of major turmoil, such as the bursting of the tech bubble, the 9/11 attacks, the global financial crisis and the COVID-19 pandemic—to name but a few. It’s not just consumers, though. Small business owners are also worried about the road ahead. According to the National Federation of Independent Business, which has also been running a survey since the 1970s, business owners are more concerned about the next six months than they’ve ever been! On the one hand, these negative views could be self-fulfilling, impacting our behavior and resulting in the very recession that people fear is coming. On the other hand, it means that expectations are really low—it wouldn’t take much in the way of good news to turn sentiment. I’d argue that things don’t necessarily have to improve by much to see public opinion shift for the better. Sentiment is often a noisy indicator, but at extremes it can signal the economy or the markets may be near a turning point. Businesses and consumers think conditions are worse than they’ve ever been…maybe that’s reason for some optimism? Note: Chart shows index levels for the University of Michigan Consumer Sentiment index (12/31/1978 through 6/10/2022) and the National Federation of Independent Business’ (NFIB) Small Business Outlook for General Business Conditions index (12/31/1978 through 6/10/2022). Data is quarterly from 1978 through 1985 and monthly thereafter. Source: Bloomberg. This material is distributed for informational purposes only. The ideas and opinions contained herein should not be viewed as recommendations or personal investment advice. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. For a summary of Adviser Investments’ advisory services and fiduciary responsibilities to our clients, please review our Form CRS here. © 2022 Adviser Investments, LLC. All Rights Reserved. Tags: Chart of the Weekconsumer sentimentgrowthJeff DeMasorecessionU.S. consumer