Chart of the Week: Expectations vs Current Situation

Chart Expectations vs Current Situation

With U.S. consumer confidence hitting an 18-year high this past month, it is safe to say that Americans are feeling pretty good about the current economic environment. However, if you look below the surface, this extreme level of optimism may actually be a cause for concern. The chart above shows the spread between how confident consumers feel about their current situation compared to how confident they feel about the future (current situation – future expectations), while the red shaded vertical lines indicate recessions and how long they lasted. What is interesting is that when the spread between these two widens significantly, generally a recession follows shortly thereafter. As of today, we are seeing the second widest gap between the indicators in history, surpassed only by a reading during the Tech Boom of the late 1990s. This chart is a great reminder that when everyone around you is feeling extremely confident about the economy, it is wise to step back and remember that all economic booms come to an end at some point. While the majority of economic data in the U.S. still remains robust, the team at Allegiant understands that at some point the economic tide will turn, and we will make changes to our client portfolios along the way to ensure that they are ready for whatever the next few years may bring.