Finally, household finances are also in solid shape, in\naggregate. Many households saved and paid down debt over the course of the\npandemic, and total U.S. household net worth was up to $2.4 trillion by the end\nof the third quarter.2<\/sup> By these fundamental measures, the economy\nappears to be in great shape. <\/p>\n\n\n\n Yet few Americans are happy about it. ___________________________________________________________________________<\/em><\/p>\n\n\n\n Bearish Sentiment Does Not Mean a Bearish Future<\/a><\/strong><\/p>\n\n\n\n The economy has experienced many ups and downs\nthis year and investors are skeptical of where we stand for the new year. Are\nwe in a good space? What can investors make of this market?<\/p>\n\n\n\n During times like these, it is important not to get caught up in negative headlines. Instead, my recommendation is to base your investing decisions on economic data releases, earnings reports, and other economic factors! If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today! ___________________________________________________________________________<\/em><\/p>\n\n\n\n In a recent poll conducted by the Associated Press, 64% of\nrespondents described their finances as good, but only 35% felt the U.S.\neconomy was in good shape. In October, the Gallup Economic Confidence Index\ndropped to levels last seen in April 20204<\/sup> \u2013 when the global economy was in lockdown<\/em>. <\/p>\n\n\n\n Two closely watched consumer sentiment measures \u2013 the\nUniversity of Michigan index and the OECD confidence survey \u2013 both show a\nfairly steep decline in sentiment starting in the spring of 2021, with\nvirtually no recovery since. <\/p>\n\n\n\n University of Michigan\nConsumer Sentiment<\/strong><\/p>\n\n\n\n OECD Consumer\nConfidence Survey<\/strong><\/p>\n\n\n\n Investors have followed a similar pattern. According to the\nAmerican Association of Individual Investors (AAII), the past month indicates\nmore bearish investors than bullish ones when looking out at the next six\nmonths.7<\/sup> <\/p>\n\n\n\n In short, there isn\u2019t much love for the U.S. economic\nrecovery, and the reasons why are likely obvious to many readers \u2013 supply chain\ndisruptions, worker shortages, and rising prices for food and energy have\npushed inflation to a 39-year high.8<\/sup> Many services in the U.S.\neconomy \u2013 from air travel to restaurants and hospitality \u2013 do not work as\nsmoothly as they used to. Workers have not returned to offices, and folks spend\nless time socializing. A sense of normalcy remains elusive.<\/p>\n\n\n\n According to the survey director of the University of Michigan\nConsumer Sentiment index, Richard Curtin, persistently low consumer sentiment\n\u201creflects an emotional response, mainly from dashed hopes that the pandemic\nwould soon end.\u201d9<\/sup> Non-stop coverage of supply chain disruptions and\ninflation pressures likely do not help boost sentiment either, in my view. <\/p>\n\n\n\n So, what does the somewhat dour consumer and investor mood\nmean for equity markets?<\/p>\n\n\n\n Probably that there is more runway for the bull market, in\nmy view. The worst sign for stocks is when euphoria and greed grip investors\nand the headlines, e.g., when everyone is focused on how well stocks are doing\nand how much further up they\u2019re likely to go. We are not seeing these signs\ntoday, and I would argue that inflation and Omicron variant worries have arguably\ntilted sentiment back into outright negative territory. Anchored sentiment can\nlead to short-term volatility, but looking further ahead, I think it\u2019s a sign\nthe wall of worry is still growing. And I view that as a positive forward\nindicator for stocks.<\/p>\n\n\n\n Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n The economy is largely in strong shape, but most people are\nunhappy about it. Indeed, what started as a year of investor and consumer\nenthusiasm for an economic boom has largely faded into a broad feeling of\nconcern and disappointment. Some of the frothy signs I noticed at the beginning\nof the year \u2013 the SPAC boom, retail investors pouring into \u201cmeme stocks\u201d and\ncryptocurrencies, etc. \u2013 have lost their luster, and the sentiment scales\nappear to be tipping firmly back into negative territory. Taken together, I\nthink that means we have a very unloved economic expansion and bull market,\nwhich is usually good news for stocks.<\/p>\n\n\n\n
To help you do this, we are offering all readers a look into our just-released <\/a>January 2021 Stock Market Outlook report.<\/a><\/strong>
This report will provide you with our forecasts along with additional factors to consider:<\/p>\n\n\n\n
IT\u2019S FREE. Download the Just-Released January 2022 Stock Market Outlook<\/a>3<\/a><\/sup><\/strong><\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/2_pic1-2-1024x395.png\")
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