Consumer Sentiment from the University of Michigan rang another warning bell for the U.S. economy this morning as the Current Conditions Index fell from 58.6 to 52.3 in November – its lowest level on record. This means consumers feel worse about their current finances and buying plans than they have at any point since 1951. This includes the depths of the Great Financial Crisis in 2007-2009.
Consumer spending accounts for approximately 70% of U.S. GDP, and with consumers continuing to feel worse about their current situation, spending could slow significantly heading into the holiday season. Plunges in this indicator in the past have usually been a precursor or accompaniment to a Recession – making today’s overvalued stock market all the more precarious.
This is yet another confirming signal that the economy is on unsteady footing and investors should be stepping carefully (and carrying a comfortable cash reserve).