Chart of the Week: Consumer Confidence: Current vs. Expectations

Chart Consumer Confidence Current vs Expectations

Overall consumer confidence levels are currently near all-time highs, driven by low unemployment and a solid economy. While many people simply look at the headline number and then move on, we always like to break down the data further and examine what is going on beneath the surface. The top panel of the chart above breaks down the overall consumer confidence reading into two data points: the confidence consumers have in their future economic expectations (black line) and the confidence they have in the current economic situation (gold line) with the red shaded bars representing a recession. The bottom panel shows the spread between the current situation and expectations. 

As you can see in the chart, when consumers feel considerably better about the current situation than they do about the future, historically it means that a recession is not too far away. This makes sense given that people generally feel the best about their current 

situation at the peak of an economic cycle. While most economic indicators do not indicate that a recession is imminent, charts like this do show that we are likely at least in the latter stages of this economic expansion. The team is continuing to monitor incoming economic data closely for signs that cracks are starting to form and continuing to structure portfolios to weather any economic storms that may be on the horizon.